February 9, 1998|
(Japan Federation of Economic Organizations)
It is understood that the Liberal-Democratic Party is studying further measures for economic recovery to be announced on February 20 before the 1997 fiscal year closes. The business community watches with serious concern how better stock prices are at the end of this year and what the economy looks like for the new fiscal year. To help regain economic stability for the Asian region as well, we strongly hope that the Diet's passage of the budget will be secured in time for the start of the next fiscal year, with the additional economic measures having also been put in place. It is important to ensure that they will produce the structural reform and economic recovery.
The LDP is, therefore, requested to give full attention to the following points:
Inadequate public information prevents the advantages of even important measures, for example, the special income tax cut, from being appreciated as widely as they should. Information activities need to be stepped up to promote a better public understanding of the purposes and merits of such measures. Some other examples in need of more effort in public information are the planned tax relief in the area of housing and land and the introduction of self service gas stations.
At present, the government's Headquarters for Promotion of Administrative Reform is in the process of drafting a new 3-year DAP. We believe that the new plan should be such as to usher in the next phase of drastic reform focused on items and areas promising a strong economic impact.
A sense of unease persists among the business community and the public at large over the tax system and other economic structural reforms being pursued by the government. This is because the direction or road map of reform still remains insufficiently defined. If the government and the LDP hope to generate the momentum for economic revitalization, they must chart a clearer course of change, thus providing the nation with a more convincing vision of the future.
They need to do this, for instance, with regard to the structural reform strategy for economic revitalization, income tax reform, corporate tax reform ( realization of an effective 40 percent rate), pension reform and so on.
Production costs remain structurally high in this country, hurting industrial competitiveness and making it difficult for the economy to turn upward with full vigor. The high-cost structure needs correction if only to ensure consistency between steady economic recovery and the structural reform. In this connection, the planned reduction of electricity rates is considered a step in the right direction. The energy sector, however, remains in need of continued cost reduction as are such areas as transportation, information/communications, and wages and salaries.
Given the still fragile status of the economy, keeping up public works investment in a steady manner is considered necessary to help sustain national economy. Such expenditures should be early loaded in the first half of fiscal 1998 as far as possible, while attention is given to their efficient implementation and distribution to prioritized projects.