Business Group Opposes Japan’s Tax Reform Plan

Prime Minister Noboru Takeshita’s much-heralded tax-reform plans are already running into trouble, only days after they were officially announced.

A leading Japanese businessman called Wednesday for major changes in the tax program and said the package, which includes a new sales tax, was unlikely to win popular support.

“We want changes in the plan,” said Rokuro Ishikawa, chairman of the Japan Chamber of Commerce and Industry. “We have not accepted it.”

Ishikawa’s comments were a surprise, as most political analysts thought Takeshita had succeeded in lining up business community support for his package.

Takeshita has put his political reputation on the line by spearheading the ruling party’s third attempt in 10 years to introduce a sales tax.

The planned introduction of a 3% consumption tax next April forms a cornerstone of the first major reform of Japan’s tax system in nearly 40 years.

The plan’s other two main elements are cuts in personal and corporate income taxes, which will begin later this year.

Political analysts think that Takeshita may have to revise his plans as he pilots the tax package through Parliament starting next month.

Ishikawa told executives that the ruling Liberal Democratic Party should increase the size of the tax cuts and delay the introduction of the sales tax. “The government should take time to implement tax increases because people are not accustomed to a sales tax,” he said.

Ishikawa also urged the party to promise that it would not raise the sales tax after it was introduced.

Meanwhile, Japan’s National Tax Agency said a record $525 million in 1987 income had not been reported.

In an annual report, the agency said individuals and organizations had earned a large part of the revenue through stocks or real estate.

The agency said it collected $372 million in taxes and penalties from those who failed to report all their earnings.

The amount of unreported earnings in 1987 was $81.6 million more than in 1986 and $30.53 million more than the previous record high of $504.47 million in 1985.

Japan’s fiscal year runs from April 1 to March 31.