based upon Hsinhua report
The contradictions between the ruling circles in Japan and the U.s,. will become acute following the passare of the ‘interest equalisation tax! bill in the U.S. Senste and House of Representatives. The Bill is designed to control the cutflow of dollars from the U.5.. Kyodo reported on Aug, 14 that the Bill was harsher than the original bill which Kennedy introduced in order to tax those who brought foreign stocks and securities. The Bill just passed stipulated that loans to foreign banks for over 4 term of one year would also be taxed, The Japanese Broadcasting Corporation reported: "The Japanese Finance Ministry considers that if loahs to banks are to be taxed, the effect on the Japanese economy should not be ignored,” It said that U.S. bark loans to Japan for a term of over one year stood at 305m. dollars in the past year; therefore Japan would ask the U.S. not to tax loans from 0.8. banks.
It is estimated that the contradictions between Japanese and U.8. | ruling groups would grow sharper with the passage of the Bill. This was i even admitted by the U.S. Ambassador in an in-erview with UPI. He said 5 \ the main divergences between the two countries were on economic issues. Relations between the U.S. and Japan would erupt -3in a etorm in the next | 3 or 4 months, U.S. loans to Japan amounted to more than 2,560m. dollars / from 1959 to 1963 and Japan's unfavourable balance of aymente is mostly | made up by foreign loans. Thus the passage of the Bill will directly affect U.S. capital going to Japan and Japn's ability to improve its balance of payments position.