Japan hauls record sales tax revenue amid pandemic
Japan’s sales tax revenue went over 20 trillion yen ($180 billion) in the last fiscal year, the first time since the levy was imposed more than three decades ago.
The country’s last sales tax hike to 10% from 8% in October 2019 stifled private consumption that makes up more than half of its economy and ushered Japan into an economic downturn through June 2020.
Then-Prime Minister Shinzo Abe stated at the time that Japan would not raise the tax rate again for a decade, amid other lawmakers’ calls for a sales tax cut to 5% or to do away with it altogether.
Revenue in the fiscal year that ended in March reached a total of 21 trillion yen, 2.6 trillion yen more than the 2019/20 fiscal. Income and corporate taxes garnered 19.2 trillion and 11.2 trillion, respectively.
Overall tax revenue likely surpassed 60 trillion yen to a record high, beating earlier estimates by around 5.7 trillion yen more.
The sales tax hike in fiscal 2020’s full-year effect, coupled with the demand for household durables in the midst of the COVID-19 pandemic, boosted sales tax income, sources, as well as analysts, said.
Japan has raised the sales tax to fund rapidly rising social security costs to support its ageing population.