Japan government urges companies to spend cash pile on wages and capex

Japan government urges companies to spend cash pile on wages and capex

On Friday, Japan’s Finance Minister Taro Aso heavily criticized the country’s companies for sitting on tons of cash. He told that the Japanese authorities should take steps to encourage them to step up spending on business investment and wages.

Internal reserves, including cash, at Japanese companies have soared by 101 trillion yen for the last four years to about 400 trillion yen, while a great number of companies are reluctant to boost business expenditures.

The minister emphasized that the situation is very serious, and the government is considering ways for that funds to be spent on wages and capital spending.

However, he told it would be quite difficult to have internal reserves taxed. It’s because it might generate so-called "double taxation" on businesses, paying the corporate tax.

Japanese policymakers expect a sustained economic recovery to stimulate wages and also household spending, although many financial experts expect inflation to be still distant from the major bank's 2% objective.

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