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.