83. Telegram From the Department of State to the Embassy in Japan0
1317. Consultative Task Force for interest equalization tax met November 18 in Department. Japanese represented by Minister Yamashita, [Page 188] Ohkawara, Matsumoto and Kaya. US represented by Under Secretary Daane of Treasury, Barnett and Trezise of State, and others.
Interest Equalization Tax
Japanese expressed concern over delayed timing of IET enactment and its implications and GOJ dilemma in attempting to estimate foreign capital component in public investment sector of budget. Said survey of European capital market possibilities has proven disappointing and GOJ now is faced with decision whether to return to New York market for funds.
We informed the Japanese that shape and content of IET would most likely be same as described to them earlier, that delay in passage of bill was result of “legislative glue” and not from any change in favorable attitude of Congress, that we thought it possible House would approve in December and Senate would take action in January. The capital market would then open with the one percent interest rate equivalent in tax added.1 Said we are delighted that Japanese making efforts obtain European capital. In response to questions we assured them that Washington Post and New York Times editorials suggesting establishment of Capital Issues Committee to screen foreign borrowings did not have USG backing.2
[Here follows brief discussion of other U.S.-Japan economic questions.]
- Source: Department of State, Central Files,FN 16 US. Limited Official Use; Priority. Drafted by Martin Y. Hirabayashi (FE/EA/J), cleared by Blaser (Treasury) in substance and Thelma E. Vettel (FE/EA), and approved by Leonard L. Bacon (FE/EA).↩
- The Interest Equalization Tax Act was not enacted until September 4, 1964. (P.L. 88-563; 78 Stat. 809)↩
- Not further identified.↩