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Prime Minister Shinzo Abe said Tuesday the government will draw up tax easing measures in the fall as part of its policy to boost Japan's economic growth, underscoring that the country cannot grow only by focusing on austerity.
"We will decide (on the annual reforms) in the fall for this year," Abe said in a speech delivered at a World Economic Forum meeting in Tokyo, while referring to the need for tax breaks for companies to boost their capital spending.
The government normally compiles such reform plans in December before submitting them to the Diet. Bringing forward the schedule apparently reflects concerns among officials that the growth strategy recently unveiled by the premier has fallen short of the expectations of financial markets.
Abe has mentioned the possibility of easing taxes on business investment, hoping this will encourage companies to renovate their production facilities and equipment and thus underpin the country's growth.
In his speech, Abe also indicated the government will put more focus on revitalizing the economy, which has been mired in nearly two decades of deflation, than committing to improving its fiscal health, the worst among major developed countries.
"Japan cannot grow by putting austerity above everything," he said. "We will seek growth at first and then fiscal rehabilitation."
On the growth strategy, to be approved by his Cabinet later this week, Abe reiterated the government eyes deregulations to allow foreign doctors to provide services in designated economic zones in Japan.
The strategy, mainly aimed at increasing investment in Japan, is a key part of Abe's economic policies, along with huge budgetary spending and bolder monetary easing by the Bank of Japan.
Last week Abe unveiled the latest part of the strategy but it did not include specific tax measures, leading to disappointment among investors and a sell-off in Tokyo stocks. Abe was forced to declare he will create a second strategy later this year, which will focus on tax breaks on business investment.