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.