A Study on Japan\'s Increase in Consumption Tax Rate and Reduction in Corporate Tax Rate
| Autor: | Lee, Chien-Te, 李建德 |
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| Rok vydání: | 2019 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 107 Since the end of 2012, Shinzo Abe began serving as the prime minister of Japan. His policy agenda involves implementing a bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investments, which is known as the Abe’s Three Arrows, or also coined “Abenomics”. His strategy to increase consumption tax rate and decrease corporate tax rate is one that has gained particular attention. With a relatively low consumption tax rate and in face of an ageing population as well as the increasing burden of social security costs, there is a pressing need to raise consumption tax rate in order to increase public revenue. From 2010, prime minister Naoto Kan raised the issue of social security and tax reform and in 2012, prime minister Yoshihiko Noda passed the reform bill to raise consumption tax rate. The plan was to increase consumption tax rate in two phases beginning from April 2014, though Yoshihiko Noda subsequently lost the election due to the consumption tax hike reform. In December 2012, Shinzo Abe was elected prime minister and consumption tax rate was increased from 5% to 8% as planned in April 2014. However, the planned increase to 10% in October 2015 was postponed to be implemented in October 2019 due to changes in economic circumstances. Japan has a higher effective corporate tax rate as compared with other countries, which is adverse to enterprises’ international competitiveness. As the world moves towards globalization, the moving-out of industries and capital has resulted in a hollowing out phenomenon. As such, to implement the growth strategy that encourages private investments, Abe’s cabinet has actively decrease corporate tax rate to boost enterprise competitiveness in order to stimulate economic recovery. Japan’s tax structure is divided into direct tax and indirect tax, with direct tax comprising a higher proportion than the latter. In comparison to direct tax, raising indirect taxes, such as consumption tax, involves a tax base that covers all taxpayers from different sectors of society, which will allow Japan to move towards establishing a more reasonable tax structure. We can already see that the tax policy to hike consumption tax and cut corporate tax has had a significant change on tax structure. Therefore, the aim of this study is to focus on such impacts on Japan’s economy as well as its financial and political system. Through empirical analyses, this study has found that decreasing corporate tax rate and reducing direct tax is beneficial to the growth of Japan’s economy. Raising consumption tax rate represents an increasing share of total tax revenue and is conducive to Japan’s fiscal deficit. In addition, issues of a reduced working population due to ageing and a low birth rate as well as the increasing burden of social security costs in face of an ageing society are both adverse to economic growth and fiscal income and expenditure. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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