Most business leaders, who have demanded corporate tax cuts of 10 percentage points, welcomed the tax reform package and financial stabilization measures hammered out by the ruling Liberal Democratic Party on Tuesday.

Some, however, expressed their doubts over its effectiveness. Shoichiro Toyoda, chairman of the Japan Federation of Economic Organizations (Keidanren), said the 3 percentage point corporate tax cuts, including corporate taxes levied at the local level, will pave the way for future reductions of the corporate tax rate. "We hope the government's corporate tax reform will continue through next fiscal year and the government will realize an actual tax rate of 40 percent as early as possible," Toyoda said.

Jiro Ushio, chairman of the Japan Association of Corporate Executives (Keizai Doyukai), said the government should now start considering income tax cuts. "To invite more foreign investment and foreign workers, the progressiveness in the nation's income tax system should be eased by lowering the maximum tax rate to about 50 percent," Ushio said.

Kosaku Inaba, chairman of the Japan Chamber of Commerce and Industry, said the tax cuts will be worth 400 billion yen annually for small and medium-size corporations, and that it will give a positive repercussion effect on those firms. On the LDP's financial stabilization package, the business leaders warned that the government must monitor expenditures of the funds from Deposit Insurance Corp. to prevent them from being used for saving financial institutions one after another.

Jiro Nemoto, president of the Japan Federation of Employers' Associations (Nikkeiren), said the government must ensure information disclosure, management responsibility and protection of depositors when injecting public money into DIC.