(Reuters) - Japanese Prime Minister Shinzo Abe has instructed finance minister Taro Aso to include a two-stage lowering of corporate taxes in stimulus measures that would kick in if the consumption tax is hiked in April as planned, the Nikkei reported, citing sources.
"A drastic corporate tax cut is necessary," Abe told Aso on Wednesday, the report said, quoting multiple sources.
The first part of Abe's plan is to end a special reconstruction tax related to the March 2011 disaster one year earlier than planned, the business daily said.
This 10 percent add-on to the corporate tax is currently slated for termination at the end of fiscal 2014.
Abe also instructed Aso to set a clear medium- to long-term plan for bringing Japan's effective corporate tax rate down to a level on a par with other major nations in fiscal 2015 or afterward, the Nikkei said.
However, Aso is believed to have expressed reluctance to the plan saying that ending the reconstruction tax on businesses could rouse discontent in disaster-hit areas and derail efforts to halve the nation's primary balance deficit in fiscal 2015, the newspaper reported.
The two men are expected to discuss the matter again as soon as Friday, the Nikkei said.
Abe plans to make a final decision on October 1 on whether to raise the consumption tax to 8 percent from 5 percent as scheduled, the paper reported.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)