World Library  
Flag as Inappropriate
Email this Article

Taxation in Japan

Article Id: WHEBN0000186403
Reproduction Date:

Title: Taxation in Japan  
Author: World Heritage Encyclopedia
Language: English
Subject: Economy of Japan, List of Japan natural gas companies, Nenko System, Private enterprise in Japan, Labor market of Japan
Publisher: World Heritage Encyclopedia

Taxation in Japan

Taxation in Japan is based primarily upon a national income tax (所得税) and a residential tax (住民税) based upon one's area of residence.[1] A consumption tax was introduced in 1989.

Taxes are administered by the National Tax Agency.


Consumption tax

The Liberal Democratic Party government of Masayoshi Ohira had attempted to introduce a consumption tax in 1979. Ohira met a lot of opposition within his own party and gave up on his attempt after his party suffered badly in the 1979 election. Ten years later Noboru Takeshita successfully negotiated with politicians, bureaucrats, business and labor unions to introduce a consumption tax,[2] which was introduced at a rate of 3% consumption tax in 1989.

In April 1997[3] under the government of Ryutaro Hashimoto[4] it was increased to 5%.[5] The 5% is made up of a 4% national consumption tax and a 1% local consumption tax.[6] Shortly after the tax was introduced Japan fell into recession,[7] which was blamed by some on the consumption tax increase,[8] and by others on the 1997 Asian financial crisis.

Prime Minister Junichiro Koizumi said he had no intention of raising the tax during his government, but after his massive victory in the 2005 election he lifted a ban on discussing it.[9] Over the following years a number of LDP politicians discussed raising it further, including prime ministers Shinzo Abe,[10] Yasuo Fukuda,[11] and Taro Aso.[12]

The Democratic Party of Japan came to power in the August 2009 elections with a promise not to raise the consumption tax for four years.[13] The first DPJ prime minister, Yukio Hatoyama was opposed, but Naoto Kan replaced him and called for the consumption tax to be raised. The following prime minister, Yoshihiko Noda "staked his political life" on raising the tax.[14] Despite an internal battle that saw former DPJ leader and co-founder Ichiro Ozawa and many other DPJ diet members vote against the bill and then leave the party, in June 26 2012 the lower house of the Japanese diet passed a bill to double the tax to 10%.[15] The new bill increased the tax to 8% in April 2014 and 10% in October 2015.[16]


In Japan, Wall of 1.03 million yen and 1.30 million yen (103万円・130万円の壁) is a controversial social phenomenon among Japanese housewives due to the government's taxation policy. Homemakers who have an income in excess of 1.03 million yen cannot take the marital deduction (配偶者控除), while those who receive an income in excess of 1.30 million yen cannot take the special marital deduction (配偶者特別控除).

The result is women participating in the workforce, but the majority only as part-time workers.[17] There is a disincentive for wives to work full-time jobs.


  1. ^ Brasor, Philip, and Masako Tsubuku, "The rise and fall of property taxes", Japan Times, 3 January 2011, p. 9.
  2. ^ The Daily Yomiuri Website REFLECTIONS ON LEADERSHIP--PART 2 / Leaders should build network of contacts, keep enemies close Retrieved on July 4 2012
  3. ^ The Daily Yomiuri Is the “cash payout plan” the most effective solution for stimulating the economy? Retrieved on July 4 2012
  4. ^ News Channel Asia Aso says raising consumption tax will not aid Japan's economy Retrieved on July 4 2012
  5. ^ Bloomberg website Japan’s Kan Tackles Sales Tax ‘Taboo’ That Obama Won’t Touch Retrieved on July 4 2012
  6. ^ JETRO website Section 3. Taxes in Japan - 3.6 Overview of consumption tax Retrieved on July 4 2012
  7. ^ East Asia Forum Japan’s aging population and public deficits Retrieved on July 4 2012
  8. ^ MSNBC Japan firms want 'safety first' on nuclear restarts: poll Retrieved on July 4 2012
  9. ^ electronic journal of contemporary japanese studies Can the Democratic Party Finally Raise Japan’s Consumption Tax? Retrieved on July 4 2012
  10. ^ The Japan Times Sales tax hike would need voter OK via Lower House poll Retrieved on July 4 2012
  11. ^ The Financial Express Fukuda Vows To Continue Reform In Japan Retrieved on July 4 2012
  12. ^ Reuters Japan PM Aso says consumption tax hike unavoidable Retrieved on July 2012
  13. ^ Asashi Shimbun DPJ’S GOVERNING FIASCO: Party never challenged Finance Ministry Retrieved on July 4 2012
  14. ^ Forbes magazine For PM Noda: A Week of Political Drama and the Challenge Ahead Retrieved on July 4 2012
  15. ^ Asahi Shimbun UPDATE: Lower House passes bills to double consumption tax Retrieved on July 4 2012
  16. ^ Daily Yomiuri website Lower house OK's tax hike bills / 57 DPJ lawmakers rebel against vote; Ozawa 'studying various options' Retrieved on July 4 2012
  17. ^ Smith, Patrick (1997). Japan: A Reinterpretation. New York: Random House. pp. 149–150.  

External links

  • Taxes in Japan,, 1 April 2014
  • 2013 Income Tax Guide For Foreigners, National Tax Agency
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from World Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.