Advanced Search
MyIDEAS: Login to save this paper or follow this series

Reforming the Tax System in Japan to Promote Fiscal Sustainability and Economic Growth


Author Info

  • Randall S. Jones
  • Masahiko Tsutsumi
Registered author(s):


    Tax reform is an urgent priority, as Japan needs as much as 5% to 6% of GDP of additional government revenue just to stabilise public debt, which has risen to 180% of GDP. In addition to raising revenue, tax reform should promote economic growth, address the deterioration in income distribution and improve the local tax system. Additional revenue should be obtained primarily by increasing the consumption tax rate, currently the lowest in the OECD area, while broadening the personal and corporate income tax bases. The corporate tax rate, now the highest in the OECD area, should be cut to promote growth, while eliminating aspects of the tax system which discourage labour supply and distort the allocation of capital. Japan should also consider introducing an Earned Income Tax Credit to promote equity. The local tax system should be simplified, increasing reliance on existing taxes on property, income and consumption. Réformer la fiscalité au Japon pour promouvoir la viabilité budgétaire et la croissance économique La réforme fiscale est une priorité urgente : l’État japonais doit se procurer des recettes supplémentaires à hauteur de 5 à 6 % du PIB pour simplement stabiliser la dette du pays, qui atteint désormais 180 % du PIB. Au-delà de cette progression des ressources, la réforme fiscale devrait promouvoir la croissance économique, faire face à la dispersion croissante de la distribution des revenus et améliorer la fiscalité locale. Les recettes supplémentaires devraient provenir pour l’essentiel d’une augmentation du taux de la taxe sur la consommation, qui est actuellement le plus faible de toute la zone OCDE, et de l’élargissement des bases d’imposition des revenus des personnes physiques et morales. Les autorités devraient abaisser le taux de l’impôt sur les sociétés, aujourd’hui le plus élevé des pays membres de l’OCDE, afin de promouvoir la croissance, et supprimer les mécanismes fiscaux qui sont préjudiciables à l’offre de main-d’oeuvre et perturbent les affectations de capital. Le Japon devrait aussi envisager, pour favoriser l’équité, l’instauration d’un crédit d’impôt sur le revenu d’activités professionnelles. La fiscalité locale devrait bénéficier de mesures de simplification et s’appuyer davantage sur les impôts et taxes déjà en vigueur en matière foncière et immobilière, ainsi que sur les revenus et sur la consommation.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: no

    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 650.

    as in new window
    Date of creation: 01 Dec 2008
    Date of revision:
    Handle: RePEc:oec:ecoaaa:650-en

    Contact details of provider:
    Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
    Phone: 33-(0)-1-45 24 82 00
    Fax: 33-(0)-1-45 24 85 00
    Web page:
    More information through EDIRC

    Related research

    Keywords: tax reform; participation rates; female employment; property tax; consumption tax; tax progressivity; labour tax wedge; tax expenditures; personal income tax; corporate income tax; local taxes; earned income tax credit; Japanese tax system; réformes du système des impôts; fiscalité; impôt sur les bénéfices; progressivité de l’impôt; système de taxation japonais; crédit d’impôt sur le revenu d’activités professionnelles; activité des personnes sur le marché du travail; fiscalité locale; taxe foncière; taxe à la consommation; dépense fiscale; impôt sur le revenu;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:650-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.