July 5, 2023

The Ministry of Finance on July 3 announced that national tax revenues in fiscal 2022 totaled 71.1 trillion yen, up 6.1% from the previous fiscal year.

Revenues increased in all the three key taxes (corporate tax, income tax, and consumption tax). In particular, revenues from the consumption tax accounted for 32.5%, the largest portion of the total. The consumer price index in FY2022 rose by 3.2% from the year-earlier level. It can be seen that the consumption tax rate of 10% in addition to the surge in consumer prices weighed heavily on low- to moderate-income consumers.

After the initial implementation of the consumption tax in 1989, its rate went up in stages from the initial 3% to 5%, and to the present 10%. Meanwhile, the maximum rate for income tax and corporate tax are now lower than the fiscal 1990 level, bringing benefits to high-income earners and large corporations.

Comparing FY2022 with FY1990, tax revenues from corporate and income taxes decreased by 3.5 trillion yen, while revenues from the consumption tax increased by as much as 18.5 trillion yen.

It is necessary for the government to review the current taxation structure which is too dependent on the consumption tax and instead levy a fair share of taxes on the high-income bracket and large corporations. This will create adequate resources to improve social welfare and childrearing support programs.