A Demand for Action to Address Japan's Economic Crisis and
Restore Confidence in its Future
September 11, 1995
(Japan Federation of Economic Organizations)
In this period of economic difficulty, with business continuing to stagnate and economic
structural reform at a standstill, a sense of crisis about the future course of Japan's economy is
mounting among corporate executives. Unless steps are taken quickly to revitalize the
economy, corporations will have no choice but to further reduce their workforces, giving rise
to the possibility of employment unrest. The situation is to serious that strong concern is
even being expressed overseas, about Japan's economy.
In order to extricate the Japanese economy from its stagnation and revive domestic and
international confidence in its future, the government should take a number of immediate
measures, including: drastic reform of the tax system; prepare a second major supplementary
budget; continue to move ahead with deregulation; and launch the relocation of the national
capital, as soon as possible. It should, moreover, endeavor to further stabilize the exchange
rate and build an economic environment in which corporation can grow to their full potential.
Above all else, we strongly demand that the following items be included in the economic
package that the government is currently drafting.
This position paper was distributed to the Japanese press and was brought to the Prime
Minister Murayama on September 11, 1995. The tax proposal of further detail was brought
to public on October 11, 1995. Translation of the tax proposal should be available by
middle of November, 1995.
- Drastic Tax Reform
A sweeping reform of the tax system, including a revision of the ratio between direct and
indirect taxation, is indispensable to achieving stable economic growth and affluent aging
society. As an interim step, the following reforms affecting economic activity should be
- Lightening of the corporate tax burden through a major reduction in the national and
local corporate tax, repeal of the land value tax and reduction of the fixed assets tax;
- Continuation of the 2 trillion yen special reduction in income tax that has been applied for two years.
- Abolition of special additional tax on long-term capital gains on land;
- Repeal of the securities transaction tax.
- Preparation of a Second Major Supplementary Budget (See Attachment)
The government must prepare a second major supplementary budget of more than 5 trillion yen
clear water base, and launch a series of on-going public works projects. Allocation of public
works projects should not to be bound by the conventional criteria of the past, but should be
based on which projects, in which locations, will contribute the most to the revitalization of
the economy by promoting private sector investment. The government should not hesitate to
raise the necessary funds for this budget through the issuance of deficit-covering bonds.
- Further Progress in Deregulation
- All deregulation measures in the forty different areas (e.g. agriculture, finance, securities
and distribution), announced by the Administrative Reform Committee in July, should be
implemented without delay.
- The government's revised schedule for implementation of The Deregulation Action
Program should be disclosed and suggestions from both domestic and international sources
should be adopted by the Administrative Reform Promotion Headquarters in accordance with
Main Items That Should Be Included In
The Second Supplementary Budget for FY 1995
- Items Related to Earthquake Reconstruction:
- Priority appropriation for special projects included in the 10 year Reconstruction
Program for Hyogo Prefecture and Kobe City;
- Implementation of a nationwide program to make public buildings earthquake-proof;
- Items Related to Construction of New Capital:
- Appropriation of special research funds for construction of the new capital;
- Enactment of Land Use Reform:
- Large-scale development of land for housing and consolidation of urban infrastructure,
leading to urban redevelopment, with priority given to construction of urban and parks
through acquisition of public lands and to acquisition of land for unspecified future use.
- Improvement of the Telecommunications Infrastructure:
- Upgrading of the information communications technology used by the public sector;
- Promotion of educational initiatives relating to the needs of our information-based
society for increasingly advanced telecommunications technology.
- Reinforcement of the Science and Technology Infrastructure:
- Increase in R&D and new technology development that leads to new business creation;
- Increase in assistance to young researchers and in support for academic activities to
promote understanding of science and technology;
- Increase in R&D in disaster prevention (integrated earthquake-related R&D, satellite
disaster monitoring) and in crime prevention technologies to ensure a safe society.
- Improvement of Transportation/Distribution Infrastructure:
- Improvement of the transportation/distribution infrastructure including construction of
major hub-airports, upgrading of maritime ports and widening of highways to facilitate
large-vehicle traffic, to help reduce transportation costs.
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