Ozawa pledges bold moves to fix economy
Source: Agencies |
September 3, 2010, Friday
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Print Edition
Print Edition
THE powerbroker of Japan's ruling party Ichiro Ozawa pledged bold steps yesterday to fix the country's flagging economy if he becomes premier, floating tax cuts and threatening to intervene in currency markets to curb the yen's rapid rise.
Ozawa would likely become prime minister if he defeats Prime Minister Naoto Kan in a September 14 Democratic Party of Japan leadership vote, but the outcome is too close to call. He heads the biggest group of DPJ lawmakers but his scandal-tainted image puts off the public and could affect the vote.
The battle in the party, which swept to power a year ago, underscores a rift that could derail Kan's efforts to curb a public debt already twice the size of the US$5 trillion economy.
"I think we need to transform the economy into one that does not rely on external demand," Ozawa said in a televised debate with Kan.
Ozawa, a critic of Kan for floating a possible rise in the 5 percent sales tax before a July upper house election that cost the ruling bloc its majority in the chamber, said he had plans for big cuts in income and residential taxes and stressed the need to cut wasteful spending. He did not elaborate.
Ozawa added he was not averse to debating the sales tax, but promised - as Kan has also done - not to raise the levy before a lower house election that must be held by late 2013.
"I am thinking of big cuts for income tax and residential taxes ... I think it is fine to debate the tax system in general, including the sales tax," he said.
The sales tax is a politically sensitive issue in Japan. The last hike, from 3 to 5 percent in 1997, was widely blamed by voters for derailing a nascent economic recovery.
Ozawa's propensity for economic stimulus has been welcomed by some financial market players worried about Japan's faltering economy, but would also exacerbate concerns about mounting debt and so steepen the yield curve for Japanese government bonds.
"He lacks a clear plan on how he will finance this," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute.
Ozawa would likely become prime minister if he defeats Prime Minister Naoto Kan in a September 14 Democratic Party of Japan leadership vote, but the outcome is too close to call. He heads the biggest group of DPJ lawmakers but his scandal-tainted image puts off the public and could affect the vote.
The battle in the party, which swept to power a year ago, underscores a rift that could derail Kan's efforts to curb a public debt already twice the size of the US$5 trillion economy.
"I think we need to transform the economy into one that does not rely on external demand," Ozawa said in a televised debate with Kan.
Ozawa, a critic of Kan for floating a possible rise in the 5 percent sales tax before a July upper house election that cost the ruling bloc its majority in the chamber, said he had plans for big cuts in income and residential taxes and stressed the need to cut wasteful spending. He did not elaborate.
Ozawa added he was not averse to debating the sales tax, but promised - as Kan has also done - not to raise the levy before a lower house election that must be held by late 2013.
"I am thinking of big cuts for income tax and residential taxes ... I think it is fine to debate the tax system in general, including the sales tax," he said.
The sales tax is a politically sensitive issue in Japan. The last hike, from 3 to 5 percent in 1997, was widely blamed by voters for derailing a nascent economic recovery.
Ozawa's propensity for economic stimulus has been welcomed by some financial market players worried about Japan's faltering economy, but would also exacerbate concerns about mounting debt and so steepen the yield curve for Japanese government bonds.
"He lacks a clear plan on how he will finance this," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute.
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