Tokyo Gov. Shintaro Ishihara said Tuesday that he has no intention of slapping a tax on the gross profits of any businesses other than banks. He also reiterated his position that major financial institutions are obliged to pay for the administrative services they enjoy. Speaking before the Tokyo Metropolitan Assembly for the first time during the current assembly session, the outspoken governor again defended a bill that would create an ordinance for taxing banks. The bill has already received backing from major parties in the metropolitan legislature. "I can't think how businesses other than banks can be targeted in the same way," Ishihara said in response to questions from assembly members. The assembly has on its agenda a proposal from Ishihara to impose a temporary tax on the operating profits of banks in Tokyo that have assets of 5 trillion yen or more. The levy would remain in effect for five years. Despite repeated warnings by financial institutions as well as the central government that the tax may negatively impact the economy and be unfair, the bill is expected to pass on March 30. "I don't bear any grudge against banks," Ishihara said during the day's deliberations. "But the finances of the metropolis are in jeopardy." Ishihara unveiled the tax proposal in an effort to raise revenue for the capital, whose coffers are in dire straits as the protracted recession cuts into its revenue stream. During the day's session, Japanese Communist Party member Kakuo Akita voiced his ire with banks. "The real problem lies in the position of major banks in which they are reluctant to extend loans, despite having received large amounts of public funds (to boost their capital base.) They are dragging down the economy," Akita maintained. Asked by New Komeito member Hideo Nakayama why the measure targets only major banks, Ishihara said, "Banks have more than enough revenue (to shoulder the burden)." "They are receiving city services without paying corporate taxes," Ishihara charged. Tokyo officials say the proposal, which will impose a local tax of up to 3 percent on the banks' gross profits, will bring a stable 110 billion yen to metropolitan coffers for the five years it is in place. After subtracting operating and personnel costs and bad loan disposal costs, net profits from banks have fallen in recent years. An estimated 30 financial institutions would be affected by the plan, according to the officials.
