Japan to slash corporate tax to spur economy

Japan’s government announced it would cut the country’s hefty corporate tax rate by 5 percentage points, in a bid to stimulate the economy and help Japanese businesses stay competitive.

The step announced late Monday is aimed at promoting investment, employment and salary increases at home so that Japan can exit deflation, Prime Minister Naoto Kan said.

"I decided to take a bold step," he told reporters.

Kan acknowledged more Japanese companies were moving abroad where corporate taxes are lower, causing job losses in Japan, Kyodo News agency reported. "That is not a plus for the Japanese economy," he said, according to Kyodo.

Japan’s corporate tax rate currently stands at about 40 percent, compared to about 30 percent in the U.S. and Britain, according to the Economy, Trade and Industry Ministry.

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