Aurelia Butler

The issue will be flagged as among key themes for debate in an outline for next fiscal year’s tax reform, which will be compiled by the government and the ruling party by year-end, Jiji said without identifying its sources.Prime Minister Fumio Kishida, who has made wealth redistribution his key policy agenda, had previously flagged the chance of raising Japan’s taxes on capital gains and dividends.But he walked the pledge back in October after drawing criticism for risking a stock market decline, saying the government would not change the taxes on investment income for the time being.The tax on income from investments – imposed on capital gains on stock and property, dividends and interest payment on savings and Japanese government bonds – is uniformly set at 20%, well below tax rates on salaries of up to 45% in an effort to encourage investment.The investment tax system also helps lower the overall burden for high-income earners, who tend to earn more through investments, an issue discussed in ruling party tax panel debates last year as lawmakers seek to strike a balance between fair taxation and potential impacts on stock markets. ($1 = 114.9100 yen) More

(Reuters) – U.S. President Joe Biden’s infrastructure and social spending legislation will not add to inflationary pressures in the U.S. economy, economists and analysts in leading rating agencies told Reuters on Tuesday.Biden has spent the past few months promoting the merits of both pieces of legislation – the $1.75 trillion “Build Back Better” plan and a separate $1 trillion infrastructure plan.The two pieces of legislation “should not have any real material impact on inflation”, William Foster, vice president and senior credit officer (Sovereign Risk) at Moody’s (NYSE:MCO) Investors Service, told Reuters.The impact of the spending packages on the fiscal deficit will be rather small because they will be spread over a relatively long time horizon, Foster added. Senator Joe Manchin, a centrist Democrat, has previously raised inflationary concerns in relation to Biden’s social spending plan, with a report earlier this month suggesting he may delay the passage of the Build Back Better legislation. “The bills do not add to inflation pressures, as the policies help to lift long-term economic growth via stronger productivity and labor force growth, and thus take the edge off of inflation,” said Mark Zandi, chief economist at Moody’s Analytics, which operates independently from the parent company’s ratings business.Zandi said the costs of both the infrastructure and social spending legislation were sustainable. “The bills are largely paid for through higher taxes on multinational corporations and well-to-do households, and more than paid for if the benefit of the added growth and the resulting impact on the government’s fiscal situation are considered”, he said in an interview.Charles Seville, senior director and Americas sovereigns co-head at Fitch Ratings, said the two pieces of legislation “will neither boost nor quell inflation much in the short-run.”Government spending will still add less to demand in 2022 than in 2021 and over the longer-run, the social spending legislation could increase labor supply through provisions such as childcare, and productivity, Seville told Reuters.The House of Representatives passed the $1 trillion infrastructure package earlier this month after the Senate approved it in August. Biden signed the bill into law on Monday.The Build Back Better package includes provisions on childcare and preschool, eldercare, healthcare, prescription drug pricing and immigration.”The deficit will still narrow in FY 2022 as pandemic relief spending drops out and the economic recovery boosts tax revenues”, Seville said. “But the legislation (Build Back Better) does not sustainably fund all the initiatives, particularly if these are extended and don’t sunset, meaning that they will be funded by greater borrowing.”The Congressional Budget Office anticipates publishing a complete cost estimate for the Build Back Better plan by Friday, Nov. 19. Biden said on Tuesday he expected the Build Back Better legislation to be passed within a week’s time. More

TOKYO (Reuters) – Japan’s export growth snapped seven months of double-digit expansion in October due to slowing U.S. and China-bound car shipments, highlighting risks for the export-reliant economy from global supply constraints.The slowing growth shows Japan’s vulnerability to supply chain bottlenecks that have been particularly disruptive for the car industry and have clouded the outlook for overseas demand.Exports rose 9.4% year-on-year in October, Ministry of Finance data showed on Wednesday, slightly below a median market forecast for a 9.9% increase in a Reuters poll. It followed 13.0% growth in the prior month.By region, exports to China, Japan’s largest trading partner, increased 9.5% in the 12 months to October, slowing from 10.3% in the previous month as car shipments to the country fell 46.8%.U.S.-bound shipments, another key market for Japanese goods, grew just 0.4% in October, also weighed by declining car exports, which fell 46.4%.Imports rose 26.7% in the year to October, versus the median estimate for a 31.9% increase, bringing the trade balance to a deficit of 67.4 billion yen ($586.60 million), compared with the median estimate for a 310.0 billion yen deficit.Separate government data showed core machinery orders, which serve as a leading indicator of capital spending in the coming six to nine months, were flat in September from the prior month, below with an expected 1.8% gain.The weaker-than-expected core orders signal corporate Japan’s reluctance to commit to firmer capital spending as global supply bottlenecks pose a risk to the outlook for output and exports.Manufacturers expected core orders to rise 3.1% in October-December, after a 0.7% gain in the previous quarter. Japan’s economy shrank faster than expected in the third quarter due to declining consumption, business spending and exports, which suffered from a resurgence in COVID-19 infections and chip and parts supply disruptions.The government is expected to announce a fiscal stimulus package worth “several tens of trillion yen” on Friday, aimed at easing the pain of the COVID-19 pandemic and reviving the economy. ($1 = 114.9000 yen) More

(Reuters) – Federal Reserve officials said on Tuesday they are vigilant of the ways that higher inflation can affect U.S. households and dampen consumer sentiment and want to get it under control.While wages are rising for some workers, consumer sentiment is down to a “level that you might associate with a recession,” said Richmond Fed President Thomas Barkin, citing the consumer sentiment survey from the University of Michigan.”I think that’s very much because of the impact that prices have on people,” including those who spend a significant part of their pay on food and gas, Barkin said during a virtual panel organized by the Fed. Atlanta Fed President Raphael Bostic said the central bank aims for low inflation because it doesn’t want households to stress about rising prices. “That’s one of the reasons why, you know, I think you’ve heard from all of us concerns about the higher levels of inflation that we’ve seen recently and the need to get that back under control,” Bostic said. The Fed this month began to reduce the pace of its monthly asset purchases, the first step in scaling back the support offered to the U.S. economy during the pandemic. Fed officials would like to wind down the bond purchases before they raise interest rates.Some policymakers say the Fed should be prepared to act in case inflation lasts longer than expected. St. Louis Fed President James Bullard, speaking earlier in the day, said the Fed should “tack in a more hawkish direction” over its next couple of meetings to be prepared in case inflation does not ease.”If inflation happens to go away we are in great shape for that. If inflation doesn’t go away as quickly as many are currently anticipating it is going to be up to the (Federal Open Market Committee) to keep inflation under control,” Bullard said on Bloomberg Television. More

(Reuters) – A public debate among Federal Reserve policymakers over how to respond to high inflation intensified on Tuesday, even as U.S. President Joe Biden neared a decision about who will lead the central bank for the next four years.Biden, who is weighing whether to keep Jerome Powell as Fed chair for another term or elevate Fed Governor Lael Brainard to the post, said Tuesday he would make the final call in about four days. As if to illustrate the challenges that either leader would face in crafting a policy consensus, San Francisco Federal Reserve Bank President Mary Daly on Tuesday called for central bank patience, saying price pressures will likely fade on their own as the pandemic recedes.”Reacting in response to things that aren’t likely to last will move us farther from — not closer to — our goals,” Daly told the Commonwealth Club of California. Raising interest rates now would not fix the supply chain bottlenecks and other temporary issues that are pushing up prices, she said, but would slow job creation and the recovery. Daly, who votes this year on Fed policy, said that uncertainty about how long the pandemic will continue to disrupt the economy makes it difficult to predict how long high inflation will last and how quickly workers sidelined by COVID concerns will return to the labor force.”Over the next several quarters, as tapering occurs, we will watch how the economy does and see whether inflation eases and workers come back,” she said. “As we get a clearer signal, we will be ready to act accordingly, continuing to provide or remove support as needed to ensure the economy settles at a sustainable place.” Earlier on Tuesday, St. Louis Fed President James Bullard took the opposite tack, urging a quicker end to the Fed’s asset purchases to put the Fed in position to raise rates as soon as next spring. The Fed began phasing out its bond-buying this month and expects to end purchases altogether by mid-2022. Its next policy-setting meeting is in mid-December.The Fed, Bullard said Tuesday, should “tack in a more hawkish direction” over its next couple of meetings to be prepared in case inflation does not ease.Bullard will be a voter next year on Fed policy. MIXED DATA, DIVIDED OUTLOOKU.S. retail sales surged in October, government data Tuesday showed, as Americans started their holiday shopping early to avoid shortages of some goods because of the ongoing pandemic. Meanwhile manufacturing output rose last month to its highest level since March 2019, data from the Fed showed.At the same time, with inflation rising at its fastest in decades and well above the Fed’s 2% goal, consumer sentiment is down to a “level that you might associate with a recession,” Richmond Fed President Thomas Barkin noted Tuesday.”I think that’s very much because of the impact that prices have on people,” including those who spend a significant part of their pay on food and gas, Barkin said.At a separate event, Atlanta Fed President Raphael Bostic noted the central bank aims for low inflation because it doesn’t want households to stress about rising prices. “That’s one of the reasons why, you know, I think you’ve heard from all of us concerns about the higher levels of inflation that we’ve seen recently and the need to get that back under control,” he said. More

RIO DE JANEIRO (Reuters) – Elon Musk and Brazilian Communications Minister Fabio Faria met in Austin on Tuesday to discuss a potential partnership that would leverage SpaceX technology to bring Internet to rural schools and cut back on illegal deforestation.In a statement, the Brazilian government said the two talked about how SpaceX and Starlink, a satellite broadband service offered by the firm, could help monitor the Amazon (NASDAQ:AMZN) rainforest for illegal cutting, while also providing Internet connections to remote schools and health centers.”We’re working to seal this important partnership between the Brazilian government and SpaceX,” Faria said, according to the statement. “Our objective is to bring Internet to rural areas and remote places, in addition to helping control fires and illegal deforestation in the Amazon rainforest.”Faria and Musk also appeared in a video posted on the minister’s Twitter (NYSE:TWTR) account on Tuesday.”With better connectivity we can help ensure the preservation of the Amazon,” Musk said. Brazil made a push at the United Nations climate change summit in Glasgow to suggest it has stepped up stewardship of the Amazon, vowing to end illegal deforestation by 2028, two years earlier than a previous target.But scientists, diplomats and activists say those promises mean little given how deforestation has soared under President Jair Bolsonaro to levels last seen in 2008. More