He told reporters that statements by Clinton administration officials indicated a lack of understanding of Tokyo's efforts to increase government spending, cut taxes and undertake painful deregulation measures. Responding to Washington's continued call for a permanent cut in personal income taxes, Mr. Kato said that he was not convinced that such a move necessarily would lead to a corresponding increase in consumer spending because many Japanese simply would save more. However, he repeated recent statements by Prime Minister Ryutaro Hashimoto and other LDP officials that tax reform would be debated after the July upper house elections. At the late April annual meeting of the Asian Development Bank in Geneva, outspoken Vice Finance Minister for International Affairs Eisuke Sakakibara vigorously defended Tokyo's stimulus measures. This is not true.
Public investment is much more effective in stimulating Japan's economy than tax cuts.
But Japan does not react to foreign pressure when it decides on its policies. We act on our own judgment. The ADB delegates did not criticize Japan's stimulus measures explicitly. In fact, many expressed gratitude for Tokyo's efforts to help Asia. However, some participants hinted that they hoped Japan would do more.