Japan Ruling Party Proposes Tax Hikes, Japan Tobacco Stake Sale to Rebuild

Source from:  Bloomberg 09/28/2011

Japan's ruling party proposed a 9.2 trillion yen ($120 billion) tax increase and selling the government's stake in Japan Tobacco Inc. (2914) to fund rebuilding from the March 11 earthquake and nuclear disaster. The Democratic Party of Japan yesterday also agreed on a third post-quake stimulus package of about 12 trillion yen, party policy chief Seiji Maehara told reporters last night. Prime Minister Yoshihiko Noda's government must now negotiate with opposition lawmakers to get the plans approved. "We need to explain sincerely to the public that tax increases are needed to support reconstruction," Maehara said yesterday. "These are temporary measures. We want to avoid a negative impact on the economy." Corporate taxes will be raised starting next April, while income taxes will increase as of January 2013, he said. Tobacco levies will go up next October. Japan plans to spend 19 trillion yen over the next five years to rebuild after the record temblor and tsunami devastated the northeast and prompted world's worst nuclear disaster 25 years. While the government has already approved two packages totaling about 6 trillion yen, the economy has shrunk for three straight quarters. The government owns just over 50 percent of Japan Tobacco, Asia's biggest cigarette maker by market value. JT shares yesterday rose 0.8 percent to 367,000, and have risen 22 percent this year. The government's share in the company was worth 1.8 trillion yen as of yesterday. Enditem