Just two weeks after being installed as Japan’s prime minister, Naoto Kan has outlined an economic agenda that will deepen the divide between rich and poor. His government last week signalled a huge cut in corporate tax rates from 40 to 25 percent, while indicating that the country’s highly unpopular sales tax could be doubled from 5 to 10 percent. The announcements follow a G-20 meeting of finance ministers two weeks ago that called for a U-turn in fiscal policy internationally —away from the stimulus packages advocated during the 2008-09 global financial turmoil and towards drastic austerity measures.
Kan was finance minister in the Democratic Party of Japan (DPJ)-led government of former Prime Minister Yukio Hatoyama. The DPJ ousted the conservative Liberal Democratic Party (LDP), which had held office virtually unbroken for more than half a century, in national lower house elections last August. Over the subsequent nine months, support for the Hatoyama government plunged from a high of around 70 percent amid continuing economic uncertainty. Hatoyama resigned on June 2 after his back down on an election promise to shift a US military base out of Okinawa triggered large local protests and a further collapse in support to less than 20 percent.
