Japanese governments latest announcement that it would
raise the consumption tax rate but cut corporate taxes will be
more harmful than beneficial to many steelmakers, one executive
"There has been a lot
of talk for many years in Japan about the need to lower the
corporate tax rate to bring it in line with international
levels," an executive from Nippon Steel & Sumikin Stainless
Steel Corp. (NSSC) told AMM sister publication
governments measures ... while I suppose is positive,
will not really benefit most steelmakers, especially the
smaller ones and stainless steel producers because they are not
making any money to be taxed anyway," he said.
"It will only help
those bigger companies who are making lots of profit and can
afford to invest in new projects," he added.
"On the other hand, we
are very worried about the impact of the increase in the
consumption tax from 5 percent to 8 percent on consumer demand.
We think the tax hike will kill demand. That means we are left
with weaker demand but no (corporate) tax benefits," the
Under the latest
stimulus package laid out Oct. 2, the Japanese government plans
some ¥1 trillion ($10 billion) in tax cuts, including
¥730 billion ($7.5 billion) in tax cuts to stimulate
business investment; and ¥160 billion ($1.6 billion) in tax
breaks for companies willing to increase wages.
It is eyeing the end of a special corporate tax surcharge
next Marcha year earlier than scheduledthat was
introduced to fund reconstruction following the March 2011
earthquake and tsunami.
A version of this
article was first published in AMM sister publication Steel