Nikkei: High Corporate Taxes Putting Ceiling on Capital Spending, Debt Payments, Salaries

September 29, 2007
By Ken Worsley

This Nikkei headline pretty much speaks for itself: 70% Of Firms Would Hike Investment If Corporate Tax Cut: Poll

The survey, which was conducted by the Ministry of Trade, Economy and Industry and is available here, asked companies how they would use extra funds should the corporate tax be cut. According to the ministry, 68.7% replied that they would invest in their plants, facilities or equipment, while 48.5% stated that the funds would go towards debt repayment. 37.3% would increase salaries or the number of employees, 26.4% said they would boost rewards to shareholders. At the bottom, 13.7% stated they would low prices on their goods and services.

With lower prices already kicking in (consumer prices fell -0.1% in August), that one’s not so much of an issue. The poll also found that 72% of firms believe the current corporate tax rate to be excessive while 50.3% stated that a cut in corporate tax would allow them to be more competitive internationally.

I’m skeptical of that last stat, but it’s the 72% who think the current corporate tax rate (the highest in the G-8) is excessive. I’d really like to ask a few questions to the other 28%, such as, “How many members of your board of representatives came from the public sector?”

Filed Under Business, Economic Reports, Economics