Japan's ruling bloc approves corporate tax cut to encourage wage hikes

Tokyo

JAPAN'S ruling bloc approved a plan on Thursday to slash the corporate tax rate to around 20 per cent from 30 per cent - but only for companies that raise wages aggressively and boost domestic capital spending.

The carrot-and-stick approach is Prime Minister Shinzo Abe's most aggressive step yet to convince companies to lift wages 3 per cent, which he believes is needed to stimulate consumer spending and vanquish the deflation that has plagued Japan for nearly two decades.

Qualifying companies would also need to substantially boost investment in facto…