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Japan plays down prospects of cut in business tax

  • Reducing Japan's corporate tax rate wouldn't have an immediate impact on the economy, Finance Minister Taro Aso says, as only around 30% of firms pay such taxes.
  • Rather, the government should consider tax breaks to promote capex and business investment. Economics Minister Akira Amari echoed those remarks.
  • In addition, Chief Cabinet Secretary Yoshihide Suga denied that Prime Minister Shinzo Abe has told ministers to consider reducing the corporate tax rate.
  • There has speculation that the government is considering the cut in order to offset a planned two-step rise in sales tax amid fears that such an increase would harm the economy as it begins to recover from deflation.
  • The Nikkei falls 2.1% while the dollar drops 0.2% vs the yen following the remarks. A lack of clarity about when the Fed might start tapering is also hurting the dollar.
  • Japan ETFs - Stocks: EWJ, NKY, EWV, EZJ, ITF, JSC, JPP, DXJ, SCJ, DFJ, FJP, JPNL, JPNS, DXJS. Bonds: JGBT, JGBL, JGBS, JGBD. Currency: FXY, JYN, YCL, YCS
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