Fumio Kishida, the Japanese Prime Minister, wants Japan to adopt a new type of capitalism.
Businesses are upset by his new plan to tax investment profits.
After he was elected leader, the Nikkei 265 dropped for eight consecutive days.
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Fumio Kishida, Japan's prime minister candidate, spoke out in favor of a new type of capitalism. As part of his promise to spread wealth more evenly throughout the country, he announced that he would tax investment profits.
It was almost certain that he would be the next prime minster on September 29 after he was elected leader the powerful Liberal Democratic Ruling party. The Nikkei 255 stock index in Japan fell 6.8% for eight days.
It has been called the "Kishida shock" by some, and critics claim that Kishida’s tax plans will continue to scare away investors.
Rakuten CEO Hiroshi Mimitani tweeted his anger after the market decline. He stated that companies already distribute tax-deducted profits their investors. BBC first reported this.
Mikitani wrote that taxing profits at the receiving end is double taxation. He questioned whether Kishida actually understood capitalism.
After his party's easy win on Monday, Kishida was elected as prime minister. However, he has now retracted his "new capitalism tax", saying that he would wait until Japan's economy improves, The Japan Times reported.
Kishida stated that the idea was to increase the overall income for all people.
His stance is quite a departure from the previous leaders of Japan, Yoshihide Suga and Shinzo Abe. They stressed growth through government spending and cheap credit from banks. Kishida stated that he wants to reduce the inequality between the wealthy and the rest.
Despite the Nikkei's tripled in value over the past 10 years, Japan's median wages are still among the lowest G7 countries at $38,500 a Year, compared to $69,000.400 in the US according to data from OECD.
Analysts aren't convinced that Kishida has fully explained his policies. According to The Associated Press, after the backlash against his tax plan, Kishida said he would reduce corporate taxes to encourage growth.
Hideo Kumano (chief executive economist at Dai-Ichi Life Research Institute), said that Kishida might not know what he wants to do.
"All we have is slogans. He said that it was not clear how many people can believe them or how they can be made real.
