Japan ponders tax cuts to boost falling birth rate

TOKYO, Mar 23 (Reuters) Japan's government and ruling parties agreed today to consider tax cuts for child-rearing as one way to halt a falling birth rate that could threaten the long-term health of the world's second-biggest economy.

The suggestion was made at the first meeting of a panel charged with drafting by June a plan to address the shortage of children in Japan's ageing society, Kyodo news agency reported.

''Because the trend towards fewer children has been advancing faster than expected, we want the government and ruling parties to closely coordinate to thrash out comprehensive and strategic measures,'' Chief Cabinet Secretary Shinzo Abe told a news conference after the panel met.

Ruling Liberal Democratic Party policy chief Hidenao Nakagawa urged the panel to consider adopting bigger tax cuts for lower-income families and those with many children, Kyodo said.

Japan's population shrank in the 12 months to last October. 1 from the previous year. The decline, the first since the end of World War Two in 1945, came earlier than government demographers had predicted.

Government policy makers who once worried about echoing wartime nationalist efforts to boost the birth rate have become more outspoken about seeking solutions.

Japan's fertility rate -- the average number of children a woman bears in her lifetime -- fell to a postwar low of 1.29 in 2004, well below the 2.1 needed to keep a population from declining.

REUTERS SK RK1045