4 December 2001, 10:06  Shiokawa - Japan growth unlikely to be negative next fiscal yr

TOKYO (AFX-ASIA) - Finance Minister Masajuro Shiokawa said he believes economic growth is unlikely to be negative in the next fiscal year, despite much more pessimistic assessments by many private-sector economists. "I believe economic growth for next year will not likely be negative," Shiokawa told a regular briefing, adding that the government is ironing out disputes with ruling coalition parties on the outline for next year's budget. "I think the ruling coalition parties will accept the government's budget outline for the new fiscal year because we offered two or three amendments to our original draft," he said. Shiokawa conceded that the government had backed down on its plans to increase workers' contributions to healthcare costs to 30 pct from April 2003, compared with 20 pct at the moment. The budget outline now merely says the increase will be introduced "when necessary", putting the measure on the backburner, after leading politicians rebelled against the increased burden for workers. The government also deleted the phrase "drastic cuts" from plans to reduce assorted tax breaks offered to corporations and individuals. The ruling parties did agree to some tax hikes, though, on investments by old-age pensioners and cheap low-malt beer. "The interest-income tax breaks for senior citizens should be abolished. Instead, we should increase spending on welfare," Shiokawa said. Senior citizens can invest up to 3 mln yen in government bonds and other securities tax-free at present. "We need to adjust tax rates between low-malt and regular beer. The problem is whether the public will accept an increase but the Liberal Democratic Party tax panel decided on a tax hike," Shiokawa said. "We would welcome that move."

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