The government issued a statement Tuesday that spells out its position on Tokyo's controversial new tax plan and at the same time washes its hands of the issue. "The government sees that the plan includes problems and asks the prefecture to deal with the issue carefully," the statement says. It also reiterates the government's position that the tax might not be fair and could have a negative impact on the nation's financial system. Political pressure has been mounting on Tokyo Gov. Shintaro Ishihara ever since he announced the plan, which would levy a 3 percent tax on the gross business profits of major banks operating in the metropolis. The tax would target banks with 5 trillion yen in assets, regardless of their profitability, and is intended to stabilize Tokyo's tax revenues. It is in direct contrast to the current central government policy of offering taxpayers' money to weak financial institutions on the verge of collapse. But Chief Cabinet Secretary Mikio Aoki said the central government does not intend to discuss the issue with the metropolitan government any further. "We have already had talks," Aoki said, noting a meeting Monday between Ishihara and Home Affairs Minister Kosuke Hori. "I don't think the central government will discuss the issue with the capital any further." Speaking to reporters following the central government's announcement, Ishihara said he had already addressed the concerns raised in the government's official statement. He said he found "some problems" with the statement expressing concerns despite its acknowledgment of the legality of the Tokyo tax plan. "This is not something that the central government should be instructing (the capital) about," Ishihara said, adding that the issue should be given to the elected members of the metropolitan assembly. The draft ordinance is to be submitted to the assembly today and put to a March 30 vote, just in time to go into effect on April 1, the start of the fiscal year. In the statement regarding Ishihara's plan, the national government questions the fairness of targeting only the banking industry and taxing only banks with assets of at least 5 trillion yen. The statement also indicated that the tax could stand in the way of a central government and Liberal Democratic Party plan that would introduce similar local corporate taxes on all industries. In addition, Ishihara's plan is at odds with state measures intended to stabilize the financial system, especially the injections of public funds. When considering the current economic slump, the strengthening of financial institutions is one of the most pressing issues, the statement says. Although Ishihara's sudden announcement of the tax earlier this month has drawn opposition from state ministers and financial institutions, the move has also provoked debate about the independence of local governments and the decentralization of power. In a related move, LDP members of the Osaka Prefectural Assembly plan to call on the Osaka governor to follow Tokyo's move. Aoki said the central government will convey its position on the issue to all 47 prefectures.
