Unless drastic reforms are carried out in Japan's financial and taxation systems, the government's latest stimulus package will have only a temporary effect on the economy, the new chief of the Japan Federation of Economic Organizations (Keidanren) warned Tuesday.

"The supplementary budget which is scheduled to be debated at the current Diet session will gradually have an impact on the economy, but we cannot expect to have a full economic recovery with such a stimulus package alone," said Takashi Imai, who also serves as chairman of Nippon Steel Corp.

The government needs to implement a financial system reform, which will in turn stimulate the nation's real estate market, and show clear direction for tax reform to attain sustainable economic recovery, Imai said.

Keidanren has been urging the government to lower the effective corporate tax rate to 40 percent and to ease the progressive nature of personal income tax rates. "We would like to make any proposal that seems necessary to Japan," he said, adding that Keidanren has to act swiftly in the rapidly changing society.

After serving four years as the Keidanren chief since May, 1994, Shoichiro Toyoda, chairman of Toyota Motor Corp., handed over his post to Imai, who became the ninth Keidanren chairman at Tuesday's organization's general meeting.