IDEAS home Printed from https://ideas.repec.org/a/wsi/serxxx/v52y2007i02ns0217590807002622.html
   My bibliography  Save this article

Are Tax Cuts Effective Even In Anticipation Of A Future Tax Increase? Evidence From Japan'S Unique Episodes In The 1990s

Author

Listed:
  • MASAHIRO HORI

    (Economic and Social Research Institute, Cabinet Office, Government of Japan, Japan)

  • SATOSHI SHIMIZUTANI

    (Institute of Economic Research, Hitotsubashi University, 2-1 Naka, Kunitachi-shi, Tokyo, 186-8630, Japan)

Abstract

This paper empirically investigates the effects of the 1995 and 1996 tax cuts in Japan. Both tax cuts were introduced to compensate consumers for an impending consumption tax rate increase from 3% to 5% in 1997. We use micro-level data of theFamily Income and Expenditure Surveyto evaluate effects of these tax cuts on household consumption, focusing on the differences between the two episodes. Our estimates indicate that theRicardian equivalencelargely holds. Only the 1995 tax cut distinctly stimulated consumption on its impact, while the 1996 tax cut had almost no effect on the consumption, presumably because it was implemented much closer to the coming tax increase.

Suggested Citation

  • Masahiro Hori & Satoshi Shimizutani, 2007. "Are Tax Cuts Effective Even In Anticipation Of A Future Tax Increase? Evidence From Japan'S Unique Episodes In The 1990s," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 52(02), pages 167-177.
    • Handle: RePEc:wsi:serxxx:v:52:y:2007:i:02:n:s0217590807002622
    DOI: 10.1142/S0217590807002622
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217590807002622
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217590807002622?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. HORI Masahiro & SHIMIZUTANI Satoshi, 2002. "Micro Data Studies on Japanese Tax Policy and Consumption in the 1990s," ESRI Discussion paper series 014, Economic and Social Research Institute (ESRI).
    2. Ishi, Hiromitsu, 2001. "The Japanese Tax System," OUP Catalogue, Oxford University Press, edition 3, number 9780199242566.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zheng, Liping & Severe, Sean, 2016. "Teaching the macroeconomic effects of tax cuts with a quasi-experiment," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 55-65.
    2. Nadia Belhaj Hassine-Belghith, 2007. "Exporting , Productive Efficiency and Product Quality: An Empirical Analysis Of the Agricultural Sector in the Mediterranean Countries," Working Papers 711, Economic Research Forum, revised 01 Jan 2007.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raphael Fischer & Gunther Schnabl, 2018. "Regional heterogeneity, the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU," International Economics and Economic Policy, Springer, vol. 15(2), pages 405-428, April.
    2. David CASHIN & UNAYAMA Takashi, 2011. "The Intertemporal Substitution and Income Effects of a VAT Rate Increase: Evidence from Japan," Discussion papers 11045, Research Institute of Economy, Trade and Industry (RIETI).
    3. Rydqvist, Kristian & Spizman, Joshua & Strebulaev, Ilya, 2009. "The Evolution of Aggregate Stock Ownership - A Unified Explanation," SIFR Research Report Series 68, Institute for Financial Research.
    4. Onji, Kazuki, 2009. "The response of firms to eligibility thresholds: Evidence from the Japanese value-added tax," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 766-775, June.
    5. Onji Kazuki & Vera David, 2010. "Tax Law Asymmetries and Income Shifting: Evidence from Japanese Capital Keiretsu," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-35, January.
    6. Moriguchi, Chiaki, 2010. "Top wage incomes in Japan, 1951-2005," Journal of the Japanese and International Economies, Elsevier, vol. 24(3), pages 301-333, September.
    7. Gahramanov, Emin & Tang, Xueli, 2013. "A mixed blessing of lifespan heterogeneity," Journal of the Japanese and International Economies, Elsevier, vol. 29(C), pages 142-153.
    8. HORI Masahiro & SHIMIZUTANI Satoshi, 2002. "Micro Data Studies on Japanese Tax Policy and Consumption in the 1990s," ESRI Discussion paper series 014, Economic and Social Research Institute (ESRI).
    9. Asher, Mukul G., 2005. "Mobilizing non-conventional budgetary resources in Asia in the 21st century," Journal of Asian Economics, Elsevier, vol. 16(6), pages 947-955, December.
    10. Sobiech, Anna L. & Chronopoulos, Dimitris K. & Wilson, John O.S., 2021. "The real effects of bank taxation: Evidence for corporate financing and investment," Journal of Corporate Finance, Elsevier, vol. 69(C).
    11. Kristian Rydqvist & Joshua Spizman & Ilya A. Strebulaev, 2011. "Government Policy and Ownership of Financial Assets," NBER Working Papers 17522, National Bureau of Economic Research, Inc.
    12. Rydqvist, Kristian & Spizman, Joshua & Strebulaev, Ilya, 2011. "The evolution of aggregate stock ownership," CFS Working Paper Series 2011/18, Center for Financial Studies (CFS).
    13. Kevin S. Markle & Douglas Shackelford, 2009. "Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?," NBER Working Papers 15091, National Bureau of Economic Research, Inc.
    14. Markle, Kevin S. & Shackelford, Douglas A., 2012. "Cross-Country Comparisons of Corporate Income Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(3), pages 493-527, September.
    15. Mr. Thomas Dalsgaard, 2008. "Japan’s Corporate Income Tax—Overview and Challenges," IMF Working Papers 2008/070, International Monetary Fund.
    16. David CASHIN & UNAYAMA Takashi, 2012. "Short-run Distributional Effects of VAT Rate Change: Evidence from a consumption tax rate increase in Japan," Discussion papers 12029, Research Institute of Economy, Trade and Industry (RIETI).
    17. Sami Alpanda, 2012. "Taxation, collateral use of land, and Japanese asset prices," Empirical Economics, Springer, vol. 43(2), pages 819-850, October.
    18. Kevin S. Markle & Douglas A. Shackelford, 2011. "Cross-Country Comparisons of Corporate Income Taxes," NBER Working Papers 16839, National Bureau of Economic Research, Inc.
    19. Been-Lon Chen & Shun-Fa Lee, 2009. "General Fund Financing, Earmarking, Economic Stabilization, and Welfare," Public Finance Review, , vol. 37(5), pages 507-538, September.
    20. Joong-Ho Kook, 2014. "An Analysis of South Korea's industries exporting to Japan," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 2(2), pages 75-90, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:serxxx:v:52:y:2007:i:02:n:s0217590807002622. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ser/ser.shtml .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.