TOKYO, March 8: Japan's ruling Liberal Democratic Party wants a package worth more than 10 trillion yen in place some time after April to help revive the economy, party policy chief Taku Yamasaki said on Sunday.The package, to be formed after parliament approval of the full state budget for the next fiscal year starting in April, should feature public works projects to be funded by construction bonds, Yamasaki said on nationwide television on Sunday.
Yamasaki said there were calls within the party for a new economic package of over 10 trillion yen. "I would like to respect such calls within the party," he said. Despite a recent string of scandals which has rocked the backbone of Japan's bureaucracy, the ruling LDP is keen to take fresh steps to stimulate the economy. "(The scandals) are very regrettable. But we must not let them cause a delay in economic policy. Improving the economy is of top priority for both politicians and the bureaucracy," Economic planning agency minister Koji Omi said onFriday.
Asked whether the package would be in the form of a supplementary budget for the 1998/99 year, Yamasaki said: "That is not wrong but I cannot say anything clearly as the issue is something to be discussed after the parliament's passage of the (1998/99) budget."
Yamasaki said he was against including income tax cuts in the package but other forms of tax cuts could be considered, such as those on investments. The package should feature traditional public works projects as well as new types of projects in areas such as social welfare, environment, energy and telecommunications.
Asked why he was against income tax cuts in the package, Yamasaki said: "The economic impact is weaker compared to public works projects. Public works projects create jobs and are more directly effective in creating demand. They are also effective for regional economies."
He added that public works projects, which would be financed by construction bonds, would not go against Japan's law to make deficit financing bondissues zero by the end of fiscal year 2003/04. Opposition parties often charge that income tax cuts would entail issues of deficit financing bonds.He said the package was likely to be formed in April or May and that it would ease worries about deflation. But Yamasaki stressed that the priority now was to pass the 1998/99 budget through parliament without revisions.
The LDP is considering measures to boost stocks and Yamasaki said it was important to secure prices at levels seen last April when the Nikkei 225 index was over 18,000 yen. Yamasaki said there were calls within the party for a new economic package of over 10 trillion yen.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
