The government should make permanent income and residential taxes cuts to shore up the nation's economy, the head of the Japan Chamber of Commerce and Industry said March 19.

At the chamber's general meeting, Chairman Kosaku Inaba urged the government to compile a supplementary budget worth at least 10 trillion yen for the next fiscal year. "The issue of fiscal structural reform is extremely important, but it is only possible after steady economic recovery," Inaba said.

Both tax cuts and additional public works projects should be implemented in the stimulus package, and the government fund should be spent especially on projects to support economic recovery, including those related to telecommunications, he said.

Inaba also said the corporate tax rate should be further reduced following this year's fiscal reduction from 37.5 percent to 34.5 percent. Speaking at the general meeting, Prime Minister Ryutaro Hashimoto, acknowledged the necessity of implementing flexible measures that respond to changes in the nation's economic and financial conditions.

However, he made no remarks regarding the widely expected supplementary budget for the next fiscal year. Hashimoto said the government will steadily implement measures, worth 30 trillion yen, to stabilize the nation's financial system and other economic stimulus measures. "But what is most needed now is an early approval of the fiscal 1998 budget," he said.