TOKYO: A year after the consumption tax rate hike from 8 percent to 10 percent the country’s finances are continuing to deteriorate due to the economic slowdown triggered by the pandemic.
The consumption tax is seen as a stable source of funds to cover social security costs. The government is using the revenue from the tax hike to reduce education fees for young children and university students and to benefit low-income older people as measures to tackle the aging of society and shore up the nation’s low birthrate, report agencies.Under the government’s general account, consumption tax revenue in fiscal 2019, which ended in March this year, grew by ¥700 billion from the previous year to ¥18.4 trillion thanks to the 2-percentage-point hike on Oct. 1 last year. However, the revenue failed to reach the expected level of ¥19.1 trillion due to sluggish consumption as fears grew earlier this year over the coronavirus.
Its total tax revenue in the year, including income tax and corporate tax, fell ¥1.9 trillion year on year to ¥58.4 trillion.
The government forecasts its total tax revenue at ¥63.5 trillion in fiscal 2020, but the actual figure will likely fall short of that amount due to the coronavirus fallout.