New Japanese PM Aso pledges tax cuts in $17 billion economic package

Mumbai: New Japanese prime minister Taro Aso has pledged tax cuts and called on the opposition to help pass an emergency economic package to kick-start a sagging economy.

Aso urged the opposition to help pass a 1.8 trillion yen ($17 billion) economic package, that includes temporary income tax cuts for households struggling with high prices of energy and food.

The steps, unveiled last month, include support for the elderly and credit guarantees for small firms. He said he would take extra steps if needed to deal with any fallout of the US financial crisis.

Aso also announced the appointment of former trade minister Shoichi Nakagawa as finance minister in his reshuffled cabinet. Nakagawa will also serve as financial services minister in the background of the unfolding global financial crisis, he said.

Nakagawa is assuming charge as finance minister at a time when Japan's public debt has mounted to 150 per cent of its GDP, the worst for a major industrialised nation.

Aso's rival in the race for the leadership, Kaoro Yosano, will hold the post of economics minister.

Aso said he would ''make efforts'' to meet a target of balancing the budget by 2012, but said he would put priority on economic growth ahead of efforts to rein in Japan's bulging public debt.

''Without economic growth there can be no fiscal reform,'' Aso said. ''It is impossible.''

He also pledged address concerns over growing pensions and health care bills for Japan's fast-ageing population.

 Aso, who took office last week after his predecessor abruptly quit, said he would give priority for strengthening ties with close ally US while also working with China and other neighbours for regional stability.

Aso is expected to call an early general election to try to break a stalemate created by a divided parliament, where the main opposition Democratic Party and its smaller allies control the upper house and can delay bills.

Opposition parties delayed a number of key bills in the last session of parliament and twice rejected the government's pick for Bank of Japan governor, leaving the seat vacant for weeks.