Japan

Japan is considering a reduction in corporate income taxes as part of a stimulus package to cushion the economy from the planned increase in the sales levy, according to three people briefed on the matter, Bloomberg reported. Prime Minister Shinzo Abe has instructed officials to discuss a cut in the tax on company profits as he weighs whether to proceed with an increase in the consumption levy in April, according to the people, who asked not to be named as the discussions aren’t public.

Don't expect the Bank of Japan to come to the rescue if the sales-tax tussle triggers financial-market turmoil, people familiar with the bank's thinking say, The Wall Street Journal reported. Debate over the plan to double the sales tax in two stages starting in April has heated up over the past six weeks. Some advisers to Prime Minister Shinzo Abe have called for him to postpone or moderate the increase, arguing that a higher tax burden would damp consumer spending and threaten economic recovery.

The International Monetary Fund on Monday made a fresh call on Japan's government to bring its flow of red ink under control, saying the central bank's monetary easing could backfire if investors believe it is "monetizing" the growing mountain of government debt, a step that often leads to financial turmoil. The IMF has recently hardened its rhetoric toward Japan, suggesting the rest of the world is worried that Prime Minister Shinzo Abe's cabinet appears divided over whether to stick to a plan to raise its sales tax from next April.

Takeshi Fujimaki, a former adviser to billionaire investor George Soros who won a seat in Japan’s upper house of parliament last month, said a delay in increasing the sales tax and reduction of Federal Reserve stimulus could cause the nation’s government bond “bubble” to burst, Bloomberg reported. Japan’s public debt, the highest ratio globally, may balloon to 245 percent of gross domestic product this year, according to the International Monetary Fund.

Tokyo Electric Power Co. is having difficulty sticking to its 10-year restructuring plan as its nuclear reactors remain idle, a key member of a government-backed fund providing financial assistance to Tepco said Thursday, The Japan Times reported. “Because the restarting of the Kashiwazaki-Kariwa plant is falling further behind schedule, it is a fact that differences between the business plan (and the current situation) are widening,” Yoshiharu Kawabata told reporters, referring to the complex in Niigata Prefecture, the biggest of Tepco’s three nuclear plants.

Bank of Japan Gov. Haruhiko Kuroda gave a positive assessment of the effects of the unprecedented monetary stimulus the central bank rolled out in April, saying Japan's economy is on track to exit 15 years of declining prices, The Wall Street Journal reported. Little less than four months after the BOJ opened the monetary floodgates, Mr. Kuroda said Monday the step has had positive effects on financial markets and corporate finance, as well as expectations for further improvements in the economy and prices.

Japan's remarkable economic rebound is likely to give Prime Minister Shinzo Abe a landslide victory in Sunday's elections, but that growth is expected to fizzle within a year or two, unless Abe uses his momentum from that win to accelerate policy changes, the Wall Street Journal reported today. Economists are already projecting a big drop in growth as early as next year, citing everything from Japan's stubbornly depressed wages and slow business investment to a plunge in the amount of government spending that is expected to flow through the economy.

Following last week's brief jump in Japanese government bond yields that helped precipitate a sudden slide in Tokyo stocks, an advisory panel to Japan's finance minister published a report Monday urging the government to undertake serious fiscal reform to avoid further rises in yields, The Wall Street Journal reported.

Japan's Elpida Memory Inc asked U.S. Bankruptcy Court in Delaware on Wednesday to enforce its reorganization plan sale to Micron Technologies Inc, a final step to creating the world's second-largest maker of memory chips, Thomson Reuters News & Insight reported. Boise, Idaho-based Micron has been losing money as the market for personal computers steadily loses ground to smartphones and tablets. Acquiring Elpida will allow Micron to create greater economies of scale and will rank the company behind Samsung Electronics in the memory chip market.

Micron Technology Inc. moved a step closer to its takeover of bankrupt Japanese memory chip producer Elpida Memory Inc. this week, The Idaho Statesman reported. The Tokyo High Court tossed out an appeal by creditors to a Tokyo District Court's approval of the company's reorganization plan which calls for Micron to take over the Japanese company. Micron’s acquisition of Elpida will give the memory chip company a larger share of the market for dynamic random access memory used in PC’s and mobile devices.