Japan Post to Start Paying Taxes in April 2007, Takenaka Says

Japan Post, the world’s biggest savings bank, will start paying taxes after it’s sold off in April 2007, said Heizo Takenaka, the minister overseeing the breakup and sale of the state-run company.

“It’s important for Japan Post to start on the same footing as other private companies,” Takenaka said on Asahi Television’s Sunday Project program. “We want to give Japan Post as much freedom and responsibility as we can.”

Taxes from Japan Post would help add to government revenue. Japan’s national debt, the highest in the world, expanded 3.7 percent to 729.23 trillion yen (USD6.6 trillion) in the three months ended June 30 from the previous quarter, the Ministry of Finance said last month.

The government plans to subject Japan Post to the same tax laws as private companies and the nation’s Financial Services Agency will also begin inspections, Takenaka said.

“It will help us to understand the scale of Japan Post’s bad loans,” he said.

Japanese Prime Minister Junichiro Koizumi wants to break up Japan Post into four separate businesses under a holding company to handle mail delivery, insurance, postal savings and management of the network of post offices.

Koizumi is also aiming to curb use of 350 trillion yen in postal savings to fund public works projects and free up more money for financing businesses. That would help banks and insurers compete against Japan Post, which has about 25,000 branches.

Oil Prices

Takenaka repeated government concerns about a sustained increase in crude-oil prices threatening economic recovery in Japan, the world’s second-largest economy. “We need to carefully watch the movement” of oil prices, he said.

Every USD10 increase in the price of a barrel of crude oil trims Japan’s gross domestic product by 0.4 percent, Takenaka said.

Record oil prices could dent corporate profits and economic growth in a nation that imports almost all of its oil. Higher oil prices increase costs for Japanese exporters, which must keep their prices low to attract customers.

Crude oil closed above USD50 on Oct. 1 for the first time because of concern that production cuts in the Gulf of Mexico and below-normal U.S. crude inventories will hinder refiners’ efforts to stow furnace fuel before cold weather arrives.

On the New York Mercantile Exchange, crude oil for November delivery rose 1 percent to USD50.12 a barrel, the highest closing price since trading began in 1983. The futures rose 2.5 percent last week.