PM Murayama announces five-year deregulation plan

PM Murayama announces five-year deregulation plan

TOKYO (AFP): Japan's Prime Minister Tomiichi Murayama
announced yesterday a five-year plan to advance measures already
taken to deregulate the economy while vowing to achieve tax
reforms by the end of the year.

But Murayama, who took office three weeks earlier as Japan's
first socialist prime minister in four decades, gave no
indication of how his three-party coalition would finance tax
cuts implemented by previous governments.

Outlining the policies of his government, an unprecedented
alliance between conservatives and socialists, the new prime
minister told parliament that economic recovery -- including
implementing the budget and stabilizing currency markets -- would
be the "primary focus" of economic management.

"While there is still serious concern about employment and the
plight of small businesses, concern that is compounded by the
yen's appreciation, there have recently been increasing signs of
promise," he said.

"We will, of course, move quickly to advance the deregulation
measures announced recently," the prime minister said. But he
added that he was also "determined to go beyond those measures
and to draw up a five-year deregulation action program and to
implement even further deregulation."

Objectives

Murayama said the objectives of such a program would include
encouraging new businesses and improving Japanese purchasing
power by narrowing the big gap in prices between Japan and
overseas.

Describing Japan's bureaucracy as "over-compartmentalized",
Murayama also vowed to undertake "forceful administrative
reform", one of the key policies of the previous two coalition
governments over the past year.

Such reforms would include reviewing the entire public service
system, streamlining special corporations, achieving
"appropriate" staffing levels, monitoring deregulation and
disclosing more government information.

Murayama, whose socialist party strongly opposed the
introduction of a three percent consumption tax five years ago,
said fiscal reforms needed to focus on achieving a balance
between income, asset and consumption taxes.

"Along with seeking to promote administrative and fiscal
reform and to ensure than the tax burden is equitably shared, I
will work ... to promote discussion of comprehensive reform and,
seeking the understanding of the people, to achieve tax reforms
by the end of the year," he said.

Murayama said such discussions would be in the context of
income tax cuts next year and beyond, but made no mention of how
the cuts would be financed.

In February, the coalition government of prime minister
Morohiro Hosokawa adopted an economic stimulus package worth
15.25 trillion yen (US$152 billion), including tax cuts amounting
to 5.85 trillion yen.

Murayama's socialist party, the biggest party in the
coalition, had earlier forced Hosokawa to abandon plans to
introduce a new "welfare tax" of seven percent, effectively
amounting to a hike in the consumption tax.

The finance ministry, which opposes paying for tax cuts with
increased bond issues, said the new tax would have raised 9.5
trillion yen a year.