TOKYO (AP) -- Japan's Parliament on Wednesday approved a record-breaking set of tax cuts totaling $79 billion in an effort to pull the nation out of its worst recession in decades.
The cuts are Japan's largest ever. Combined with a $691 billion budget passed in Parliament last week, they are intended to stimulate Japan's ailing economy, suffering from a banking crisis and slumping domestic demand.The tax package gained final approval in Parliament's upper house and is scheduled to take effect April 1.
Government spokesman Satoshi Watanabe said $58 billion of the tax cuts are permanent reductions applicable mainly to income, residential and corporate taxes. The balance is for strategic tax relief such as relief on mortgages, Watanabe said.
The government will finance the measures with bonds, he said.
In addition, income tax rates will be slashed by 20 percent, with the maximum reduction set at $2,110, while residential tax will be reduced by 15 percent, up to a maximum of $338.
The effective corporate tax rate will be cut from 46.36 percent to 40.87 percent, which near rates in other industrialized countries. The cut will reduce corporate taxes by $19 billion.
The government is also set to abolish taxes on securities transactions and commissions at some exchanges, Watanabe said.
The recently-approved budget, also to take effect on April 1, includes legislation to boost government spending by 5.4 percent and calls for $84 billion in new public works outlays.
The budget's approval was the swiftest in postwar history, reflecting a growing urgency within the government to reinvigorate the world's second largest economy.