Japan’s tax revenue for the financial year ended March 2021 rose to a record high, likely exceeding 60 trillion yen ($540 billion) despite the devastating impacts of the COVID-19 pandemic to the nation’s economy.
A news report by Reuters linking two government sources to the tax revenue figures, indicated that the bumper tax revenue could ease concerns about the coronavirus-hit to state coffers, possibly fuelling calls for further fiscal stimulus even though massive COVID-19 spending rolled out last year has added to the industrial world’s heaviest public debt burden.
The report stated: “The amount was bigger than the government’s initial estimate of 55.1 trillion yen and due largely to the boost to corporate profits from solid U.S. and Chinese economic recoveries, the officials said on condition of anonymity as they were not authorised to speak publicly.
“The other two main components of tax revenue – sales tax and income tax – also topped earlier estimates, helping overall tax receipts exceed the previous record of 60.4 trillion yen seen in the fiscal year that ended March 2019”, the sources said.
Commenting on the revenue figures, senior economist at Dai-ichi Life Research Institute, Takuya Hoshino, said: “This was a surprise. I expected tax revenue to fall due to the pandemic.
“This may encourage lawmakers to call for an additional extra budget around 10 trillion yen before the election later this year,” on top of about 30 trillion yen of last fiscal year’s stimulus budget that remained unused, the economist added.
Analysts believe that while a global economic recovery helped boost corporate tax income in the latter half of last fiscal year, steady employment and rising stock prices may have underpinned private consumption that makes up more than half of the economy.
In addition, the fiscal experts also noted that the October 2019 sales tax hike to 10% from 8% also helped boost tax revenue on a full-year basis in the last fiscal year.
According to Reuters, “despite being saddled with huge public debt at more than twice the size of its $5 trillion economy, Japan has rolled out three stimulus packages totalling $3 trillion over the past year to battle the health and economic crisis.
The spectre of lacklustre growth in the world’s third largest economy and a looming general election expected to be held later this year will keep the government under pressure to roll out even more stimulus. Some lawmakers are demanding a 26 trillion yen ($239 billion) extra budget”, the news medium added.
