July 15, 2021

Tax revenues in fiscal 2020 in Japan reached a record-high of 60.8 trillion yen, exposing the twisted collection of taxes. Let's look at changes in revenues from consumption tax, corporate taxes, and income taxes.

Consumption tax

The tax revenue from consumption tax increased to 21 trillion yen in FY 2020 from 17.7 trillion yen in FY 2018. In FY 1990, the amount was 4.6 trillion yen. The increase is attributed to the revenue growth associated with hikes in the consumption tax rate. The tax was introduced at 3% in 1990 and went up to 8% in April 2014 followed by the rise to 10% in October 2019.

Corporate taxes and income taxes

The tax revenue from corporate taxes was 18.4 trillion yen in fiscal 1990. It decreased to 12.3 trillion yen in 2018 and dropped further to 11.2 trillion yen in 2020. Likewise, tax revenues from income taxes continued to decline: 26 trillion yen in 1990, 19.9 trillion yen in 2018, and 19.2 trillion yen in 2020. Cuts in the maximum tax rates on income taxes and corporate taxes resulted in these continuous declines. In addition, the economic slowdown due to the global spread of the novel coronavirus in fiscal 2020 was reflected in the decline in tax revenues from corporate and income taxes.

Japan's GDP in fiscal 2020 dropped by 4.6% from the previous year, the worst figure since WWII. This shows that the increase in tax revenues was a result of the consumption tax siphoned off from the general public.