Tuesday, Jun 15, 2010
Japan Central Bank launch funding to assist SME to raise productivity and stimulate demands……………………
AsiaOneNews: Bank of Japan to offer US$33 billion loan scheme
Bank of Japan to offer US$33 billion loan scheme
To address this, the bank announced a temporary low-interest lending scheme, the total amount of which would not exceed 3 trillion yen (US$33 billion.)
The Bank of Japan will make low interest funds available to private banks to lend to companies, a move it hopes will in turn encourage firms to make longer-term business investments in a bid strengthen the economy.
The loan scheme will target 18 sectors including healthcare, environment and energy, tourism, science and technology as well as agriculture, forestry, and fisheries, the bank said.
Posted by simon68 @ 08:50 AM (564 views) Add Comment
9 Comments
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1. uncle tom said...
And the significance for UK house prices is....??
2. simon68 said...
It's always helpful to the economy to provide SME with need finance to build thing, manufacture thing and export thing. Than just to prop up properties price.
3. mark wadsworth said...
They are mentally ill. If they really wanted businesses to have more money, they could just tax them less; rather than taxing them more (now or in future) and giving the money to the banks in the vain hope that the banks will lend it back to the people who paid the tax in the first place.
As it happens, Japan used to have land value tax* (the historical remnants of this is shown by the way that they don't have property price indices, they have land price indices) but that fell by the wayside a few decades ago and look what has happened since.
* It having been a fairly feudal country until a century ago with a large population and only relatively small areas that are suitable for agriculture or towns and cities.
4. p. doff said...
Simon, do you have a Japanese Uncle?
recaptcha 'Minister anytime'
5. simon68 said...
TO: mark wadsworth
Don’t confuse liquidity with profitability!!!
Many businesses are only getting several percentage profits on their revenue. The tax is just certain percentage of the net profit (which is a certain % of G/P, itself a certain % of the turnover). If they are running a manufacturing plant, they need to place substantial amount on capital investments where the pay-back period may take more than a decade, so the cash-flow requirement is enormous.
What the Japanese Gov’t do is just to encourage businesses to make long-term investments.
6. simon68 said...
What the 1873 Land Tax Reform in Japan did is just to establish the legal title of the land ownership away from the Monarch and imposition of tax on owner instead of famer, and tax in form of cash instead of rice/wheat, and tax rate on land value instead of projected value of harvest.
I believe if UK is going to impose LVT it will be on top of existing council tax. So, landlord will pass on such tax to occupiers who are already paying council tax and ground rent.
7. mark wadsworth said...
Simon68, ta for background on Japanese LVT.
As to your other comments, you know as well as i do that the only conceivable way in which LVT could be introduced is if there were other offsetting reductions which mean that most people are better off or at least no worse off. So Council Tax and SDLT and probably IHT, CGT and TV licence are straight out of the window.
Secondly, don't forget that a landlord cannot merrily 'pass on' such a tax. If they could get away with charging higher rents, they would already be doing so. The tax would have no more impact on gross rents paid than any other tax or expense borne by landlords (income tax, CGT, interest rate changes, repair costs). The vast bulk of a landlord's income is the location rental value, and that is what would be taxed. Rents OTOH are a more or less fixed fraction of people's disposable income - they do not fluctuate much. This is a simple matter of fact and observation and economic logic.
(Or as a thought experiment, consider two identical flats in identical blocks with identical leases except in one respect - the flat in Block A has to pay £3,000 a year ground rent and the flat in Block B has to pay £100 a year ground rent (assuming actual service charge is also identical). Wouldn't the selling price of the flat in Block A be about £50,000 less than the flat in Block B?)
Finally, and more importantly, there is a long run equilibrium between rents that people pay and the amount they are prepared to commit to a mortgage. Homeowners cannot 'pass on' the tax to anybody at all - they just have to pay it. So the price that people will be prepared to pay for a house will fall accordingly (the tax would act like a much higher interest rate on the land element). The equlibrium between average rents and average mortgage; and the equilibrium 'return on capital invested' by the landlord will be re-established by dint of the fact that capital land values will fall.
If none of what I say were, then rents and house prices would FALL if interest rates or council tax or ground rent go down and they would RISE when interest rates or council tax or ground rent go up (it must be blindingly obvious that this is not the case).
8. easybetman said...
"If they could get away with charging higher rents, they would already be doing so"
If it is that simple, then surely if the government jack the VAT to 30% shop prices will remain the same as the shop must have charged whatever they could have got away with ?
More likely we will see contracts saying tenants are liable to pay the LVT and for prime properties (those in Oxford Street), shop just have to take the term for it and then increase the price of goods and services to cover the LVT. For properties in secondary areas, perhaps the LVT can't be passed on as easily. Result - the super rent seekers are doing just fine while those small time property investors got sc**w.
The issue with UK land is monopoly/concentration and LVT isn't going to change that a bit.
9. John said...
easybetman said...
"the issue with UK land is monopoly/concentration and LVT isn't going to change that a bit."
That is totally incorrect. LVT is on all land used or not - a tax on its "value". Vacant plots will be cleared up as happened in Pittsburg and Harrisburg. Liverpool has wanted to implement LVT to clear up abandoned properties with absent landlords, however was prevented from doing so. These properties scar the city.
However you implied the Stalinist planning system is wrong - a system primarily to control people that ensure high quality habitation. You are 100% right in that.
The law states the tenant must pay Council Tax. The same would apply to LVT. LVT does not tax the buildings improvements (Man made CAPITAL) . If you put a conservatory on he back you are not taxed. LVT is on the LAND's value.
The LAND was not produced by man made CAPITAL. The LANDs value is because of Community activity: demand because of jobs, infrastructure paid for by community taxes, etc. The owner did NOTHING to increase/create that value.
The value that soaked into the LAND is the communities. They created it. The resources extracted from the non-man-made LAND is the communities. LVT reclaims that value. In return no Council Tax or Income Tax is levied.
The state does not take private wealth. The state reclaims community wealth that soaked into the land crystallizing as LAND VALUES. With LVT CAPITAL is not taxed, only LAND. Not taxing CAPITAL ensure a vibrant free enterprise community. Taxing LAND values ensures the free market is stable and no boom and bust.
The Jubilee Line extension costed £3.4 billion. The land values around the stations rose by £14 billion. LVT would reclaim the cost of the metro extension and could even give a better metro extension. There is a big gap in infrastructure funding. This is because of a massive sluice that is the land market - private land owners receiving windfall gains. Plug the gap with LVT and economic growth infrastructure is easily built.
Harrisburg, is using LVT to fund infrastructure.Homg Kong built an airport and metro using LVT.