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.