Central government tax revenue may reach its highest level in 17 years in fiscal 2014 on the back of the April 1 consumption tax hike and growth in corporate and individual income tax receipts, Finance Ministry officials said.
Tax revenue is estimated to total around ¥51.5 trillion, over ¥1 trillion more than was projected in December 2013 when an initial budget for the year through March 2015 was compiled, the officials said Monday.
Prime Minister Shinzo Abe’s administration plans to tap the projected increase to fund an extra budget for the current fiscal year to prop up the economy, which has stalled following the consumption tax hike to 8 percent.
Including an unused amount from the fiscal 2013 budget, the government will try to secure about ¥3 trillion to finance the supplementary budget without issuing new debt for fiscal 2014, the officials said.
In December 2013, the government forecast that tax receipts for this fiscal year would total about ¥50 trillion. Aggregate tax revenue for the year is now projected to reach the highest level since ¥53.9 trillion in fiscal 1997, when the consumption tax rate was raised to 5 percent from 3 percent.
The ministry said Monday that central government tax revenue jumped 10.4 percent from a year earlier to ¥18.14 trillion in the six months through October.
During the first half of fiscal 2014, individual income tax revenue increased 7.8 percent to ¥7.75 trillion and corporate tax revenue rose 19.6 percent to ¥1.27 trillion with improvement in corporate profits. Consumption tax revenue also climbed 25.2 percent to ¥4.46 trillion.
But it is uncertain whether the government can promote fiscal rehabilitation down the road, given that last month Abe decided to put off raising the consumption tax to 10 percent next October as planned.
He now intends to raise the rate in April 2017.
Moody’s Investors Service Inc. said Monday it has revised downward its credit rating on Japanese sovereign bonds by one notch to A1 from Aa3 with stable outlook, citing uncertainty over the nation’s ability to restore its fiscal health.
Japan’s fiscal health is the worst among major industrialized economies, with public debt at more than 200 percent of gross domestic product.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.