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Japan PM Abe Unveils Plan for Tax Cuts to Boost Capex

Japanese Prime Minister Shinzo Abe.
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Japanese Prime Minister Shinzo Abe.

Japanese Prime Minister Shinzo Abe said on Sunday the government would decide on tax cuts in autumn to encourage companies to boost capital expenditure as part of sweeping reforms to revive the economy from nearly two decades of stagnation.

The government will also work on legislation to scrap regulations hampering corporate research and investment and secure passage in parliament in autumn, he said.

"We'd like to decide on bold tax cuts for capital expenditure in autumn," Abe told public broadcaster NHK.

The measures will add to a series of steps the government unveiled in a draft of its growth strategy last week, such as setting up special economic zones to attract foreign business and raising incomes by 3 percent annually.

(Read More: Investors Dump Japan, but Soros May Be Buying Again)

The growth strategy is the "Third Arrow" in Abe's prescription to reverse deflation, which also includes hyper-easy monetary policy and big government spending.

The first part of Abe's growth strategy, to be finalized on Friday, failed to impress markets that saw it as lacking specifics. That helped push down Japanese equities to two-month lows on Friday.

Abe said his government would lay out the second part of his growth strategy in autumn, to include the tax cuts, when parliament reconvenes after an upper house election on July 21.

"We will make that parliament session one in which we'll implement our growth strategies," he said.

On recent market turbulence and sharp falls in Tokyo share prices, Abe said he would not comment on day-to-day market moves, but stressed that his policy measures were already leading to improvements in output and job conditions.

(Read More: Japan Bear Market Gives Investors Bad Case of Déjà Vu)

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