Japanese Tax Revenues Fell Over Ten Per Cent Last Year

by Mary Swire, Tax-News.com, Hong Kong

03 June 2003

The Japanese Finance Ministry yesterday revealed a further decline in overall tax revenues which were down 10.8% in the year to April 2003. The situation is likely to worsen as the economic outlook remains bleak and the government attempts to boost demand by phasing in one trillion yen ($8.4 billion) worth of tax cuts this year.

In this period, income tax collections fell by 16.9% whilst the take from consumption taxes was eroded by 1%. Corporate tax revenues are also expected to show a reduction when the end of May figures are produced.

Sales tax has been a source of some debate in Japan recently, with Prime Minister Junichiro Koizumi rebuffing speculation that the government-appointed Tax Commission will recommend a hike in consumption tax to help pay for a creaking social security system.

Japan's national debt has grown to 140% of GDP in recent months, as the government struggles to revive a persistently stagnant economy. This is the highest level of all of the industrialised nations.

Recommended