1. Abe Predicts Bump in Tax Revenue as Japan Emerges
From Recession – Bloomberg
Japanese Prime Minister Shinzo Abe’s
government predicts that tax revenue will exceed cash raised
from bond sales for the first time in four years as the nation’s
economy emerges from last year’s recession.
The government forecasts 43.1 trillion yen ($474 billion)
of tax revenue for the coming fiscal year, which starts April 1,
compared with 42.85 trillion yen from issuing bonds, Finance
Minister Taro Aso said in Tokyo late yesterday. Total spending
is forecast at 92.6 trillion yen.
A rosier outlook for tax receipts may help Abe as he
applies short-term fiscal stimulus and prepares for an overhaul
of levies designed gradually to rein in a debt burden that’s
more than twice the size of the economy. He’s relying on
improvements in corporate profits even as the shutdown of most
of the nation’s nuclear plants and weakness in the yen drive up
energy costs for manufacturers.
“We can’t say that fiscal discipline is fully ensured by
this budget,” said Junko Nishioka, chief economist at RBS
Securities Japan Ltd. and a former Bank of Japan official.
“Actual tax revenue could fall short of the government’s
forecast.”
The government today raised its economic growth forecast
for the next fiscal year to 2.5 percent from an August estimate
of 1.7 percent after declines in the yen and the unveiling of a
stimulus package this month. Nominal growth is seen at 2.7
percent, from an earlier forecast of 1.9 percent, the cabinet
office said.
Consumer price growth is seen at 0.5 percent. The economy
shrank in the second and third quarters of last year. The
government’s initial forecast for tax revenue in the 2012 fiscal
year was 42.3 trillion yen.
‘Abnormal’ Picture
“We’ve been saying for three years that bond issuance
exceeding tax revenue is abnormal,” Aso told reporters
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2. yesterday evening. That tax receipts will be higher this time is
“a big deal,” he said.
The yen was little changed today at 90.89 per dollar as
11:10 a.m. in Tokyo. The Nikkei 225 Stock Average was down 0.5
percent.
Abe gives a policy speech to the opening session of the
Diet today, laying out his agenda as he seeks support for coming
Bank of Japan (8301) personnel appointments and his tax overhaul. He’s
the first Japanese prime minister to see his popularity rise in
his initial month in office since Junichiro Koizumi in 2001,
according to a Nikkei newspaper poll that showed voters favor
his policy on monetary stimulus.
Income Tax
To raise revenue, Abe’s Liberal Democratic Party proposes
increasing the top income tax rate to 45 percent from 40 and the
inheritance tax to 55 percent from 50 percent. It also calls for
encouraging the transfer of generational wealth by offering
reduced tax rates on gifts to children and grandchildren.
Abe’s approval rating rose six percentage points to 68,
according to the poll by telephone between Jan. 25-27. The prime
minister has the chance to replace Governor Masaaki Shirakawa in
April and two deputies in March with policy makers who support
monetary stimulus to revive growth.
Abe’s administration has also sought a weaker yen to aid
export competitiveness. At the World Economic Forum’s annual
meeting in Davos, Switzerland, Japanese Economy Minister Akira Amari said Jan. 26 that the
new government is not actively
targeting a weaker currency, instead aiming at defeating
deflation.
Japan is “absolutely not deviating from global
standards,” Amari told “I don’t comment on a foreign-exchange
rate because it should be determined by the market. What we do
is to implement policies.”
International Concern
Amari spoke at the end of a week in which German and
Canadian policy makers joined a worldwide chorus highlighting a
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3. recent plunge in the yen as a worry. The currency has declined
to its lowest against the dollar since June 2010 as pushes for
easier monetary policy.
That strategy has sparked criticism that Abe is trying to
weaken the yen to stoke exports, breaching a pledge by Group of
20 economies not to competitively devalue exchange rates for
fear of sparking a so-called currency war.
“The Abe administration attaches its highest priority to
exiting from prolonged deflation partly accompanied by the
appreciation of the yen, and revitalizing the economy,” Amari
said.
Some ‘Misunderstandings’
“Many nations said they welcome and support Japan’s new
measures,” he told reporters. “Misunderstandings held by a
small group of people have been cleared up.”
Speaking on the same Davos panel, Bank of Canada Governor
Mark Carney commended Japan’s focus on beating deflation.
Carney, who will move to the Bank of England in July, said Amari
had been “very clear and the Bank of Japan is clear in terms of
the policy focused on a domestic inflation target.”
German Chancellor Angela Merkel said on Jan. 24 in Davos
that “I can’t say I’m completely free of worry when I look at
Japan right now.” Canadian Finance Minister Jim Flaherty told
Bloomberg Television’s Erik Schatzker three days ago that he’s
spoken to Japan Finance Minister Taro Aso about exchange rates.
To contact the reporters on this story:
Toru Fujioka in Tokyo at
tfujioka1@bloomberg.net;
Simon Kennedy in Davos, Switzerland at
skennedy4@bloomberg.net
To contact the editor responsible for this story:
Paul Panckhurst at
ppanckhurst@bloomberg.net
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Waddywood.com Abe Predicts Bump in Tax Revenue as Japan Emerges From Recession –
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