Taxation in Japan
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|An aspect of fiscal policy|
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. There is a consumption tax and excise taxes at national level, an enterprise tax and a vehicle tax at prefectural level and a property tax at municipal level.
Taxes are administered by the National Tax Agency.
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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, which was introduced at a rate of 3% consumption tax in 1989.
In April 1997 under the government of Ryutaro Hashimoto it was increased to 5%. The 5% is made up of a 4% national consumption tax and a 1% local consumption tax. Shortly after the tax was introduced Japan fell into recession, which was blamed by some on the consumption tax increase, 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. Over the following years a number of LDP politicians discussed raising it further, including prime ministers Shinzo Abe, Yasuo Fukuda, and Taro Aso.
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. 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. 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%. The new bill increased the tax to 8% in April 2014 and 10% in October 2015. Due to Japan's economic situation, the Abe government has decided to delay the tax increase to 10% until April 2017. 
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?), and 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, ensuring that their income remains below the 1.03 million yen threshold. Thus, there exists a disincentive for wives to work full-time jobs.
- Brasor, Philip, and Masako Tsubuku, "The rise and fall of property taxes", Japan Times, 3 January 2011, p. 9.
- The Daily Yomiuri Website REFLECTIONS ON LEADERSHIP--PART 2 / Leaders should build network of contacts, keep enemies close Retrieved on July 4 2012
- The Daily Yomiuri Is the “cash payout plan” the most effective solution for stimulating the economy? Retrieved on July 4 2012
- News Channel Asia Aso says raising consumption tax will not aid Japan's economy Retrieved on July 4 2012
- Bloomberg website Japan’s Kan Tackles Sales Tax ‘Taboo’ That Obama Won’t Touch Retrieved on July 4 2012
- JETRO website Section 3. Taxes in Japan - 3.6 Overview of consumption tax Retrieved on July 4 2012
- East Asia Forum Japan’s aging population and public deficits Retrieved on July 4 2012
- MSNBC Japan firms want 'safety first' on nuclear restarts: poll Retrieved on July 4 2012
- electronic journal of contemporary japanese studies Can the Democratic Party Finally Raise Japan’s Consumption Tax? Retrieved on July 4 2012
- The Japan Times Sales tax hike would need voter OK via Lower House poll Retrieved on July 4 2012
- The Financial Express Fukuda Vows To Continue Reform In Japan Retrieved on July 4 2012
- Reuters Japan PM Aso says consumption tax hike unavoidable Retrieved on July 2012
- Asashi Shimbun DPJ’S GOVERNING FIASCO: Party never challenged Finance Ministry Retrieved on July 4 2012
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- Asahi Shimbun UPDATE: Lower House passes bills to double consumption tax Retrieved on July 4 2012
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- Smith, Patrick (1997). Japan: A Reinterpretation. New York: Random House. pp. 149–150. ISBN 978-0-679-74511-2.