Chief Cabinet Secretary Shinzo Abe voiced support Monday for a proposal to delay the cancellation of income tax cuts if it would harm the economy.
"We will certainly have to consider the matter flexibly if the economy turns sour," Abe, the top government spokesman, said at a news conference.
Abe's comments follow a proposal by the ruling Liberal Democratic Party's policy chief Sunday to add a clause to the planned tax revision that could defer abolition of income tax reductions out of concern over negative effects on the economy.
LDP Policy Research Council Chairman Hidenao Nakagawa floated the idea in response to a recent recommendation by the Tax Commission that the 1999 income tax cuts be completely ended in 2007.
The government has already decided to cut the income tax reductions by half next year. The tax breaks were introduced as an economic stimulus by the administration of Prime Minister Keizo Obuchi.
"Even if all-out abolition is decided, a certain clause (in the tax revision) is indispensable in order to deal with the step flexibly," Nakagawa said in a speech in Hiroshima.
Nakagawa cited uncertain factors, including soaring crude oil prices, saying, "Japan has yet to fully pull out of deflation."