Japan’s sales tax revenue exceeds Y20 trillion for 1st time – document


A shopper wearing a protective face mask is seen at a shop selling office wear, amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan July 27, 2020. REUTERS/Issei Kato/Files

July 1, 2021

By Takaya Yamaguchi

TOKYO (Reuters) – Japan saw sales tax revenue exceeded 20 trillion yen ($180 billion) in the fiscal year that ended in March for the first time since the levy was introduced more than three decades ago, an internal government document obtained by Reuters showed.

The last sales tax hike to 10% from 8% in October 2019 dampened private consumption that makes up more than half the economy and pushed Japan into a recession – two-straight quarters of economic contraction through June 2020.

Then Prime Minister Shinzo Abe said at the time that Japan would not raise the sales tax rate further for a decade.

Year-to-March revenue of 21 trillion yen rose by 2.6 trillion yen from fiscal 2019/20 and made the unpopular tax the biggest contributor to state coffers, the document showed. Income and corporate taxes raised 19.2 trillion yen and 11.2 trillion respectively, it showed.

The full-year effect of the sales tax hike in fiscal 2020, as well as demand for household durables amid the COVID-19 pandemic, helped boost sales tax income, the sources said.

In recent years, Japan raised the sales tax rate twice to fund snowballing social security costs to support a fast-ageing population.

In April 2014, it was raised to 8% from 5%, and again to 10% in October 2019.

($1 = 111.0700 yen)

(Writing by Leika Kihara and Tetsushi Kajimoto; Editing by Chang-Ran Kim and Stephen Coates)

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