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Major Tax Reforms in Recent Years

 

Socioeconomic situation

Income-based taxes

Consumption-based taxes

Property-based taxes, etc.

Tax reform
in 1989

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Aging of demographic structure

-

Changes in industrial and employment structures

-

Rising and equalizing income level

-

Globalization of socioeconomy

-

Reduction of individual income tax
Easing of progressive tax rate structure

-

Income Tax
  Tax rate:15 brackets
ya00.gif (844 ???) 5 brackets

-

Inhabitants Tax
  Tax rate:14 brackets
ya00.gif (844 ???) 3 brackets
Increase in the exemptions

-

Reduction of corporation tax rate
(42%
ya00.gif (844 ???) 37.5%)

-Introduction of consumption tax

-Integration and streamlining of individual indirect taxes
(Abolition of 8 taxes including commodity tax)

-Reduction of inheritance tax
(Easing of tax rate structure, increase in basic deduction, etc.)
-Review of taxes on interests
(Abolition of preferred savings system)
-Imposition of taxes, in principle, on capital gains from transfer of stocks, etc.

Land tax
reform
in 1991

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Expanded differentials in value of properties due to soaring land prices, etc.

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Enactment of the Basic Land Act (Introduction of the "basic concept" of the public nature of land)

   

-Introduction of Land Value Tax
-Rationalization of tax imposed on capital gains from transfer of land
-Rationalization and equalization of evaluation method employed by the Property Tax
-Overall review of the Special Land Holding tax, etc. (*)

Tax reform
in 1994

-

Accelerated aging of the demographic structure

-

Rising and equalizing of income level, and accumulation of assets in the economy

Reduction of individual income tax.
(Easing of progressive tax rate structure, increase in exemptions, etc)

-Reform of the consumption tax system
(Contraction of the special measures for medium- and small-sized enterprises, etc)
-Increase in the consumption tax rate
-Introduction of the local consump-tion tax
(3%
ya00.gif (844 ???) 5% (including local consumption tax))

Reduction of inheritance tax
(Easing of tax rate structure, expansion of special measures for small scale housing land, etc.)

(*) Taxation on land was reviewed and changed in FY 1996 and FY 1998 tax reforms.

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