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- The Political History of the Consumption Tax
- [2012.09.28] Read in: 日本語 |
In August 2012, the plenary session of Japan’s upper house approved a bill containing a consumption tax hike and other measures. Fierce debate and much political wrangling have surrounded the issue of increasing the consumption tax over the years. The following traces this history.
The Political History of the Consumption Tax
| January 1979 | Prime Minister Ōhira Masayoshi’s administration decides to implement a general consumption tax to improve public finances, but abandons the plan in the face of a severe public backlash in the October general election. |
| February 1987 | The administration of Prime Minister Nakasone Yasuhiro submits a draft sales tax bill to the Diet, but abandons the bid in May due to widespread public opposition. |
| December 1988 | A consumption tax bill is passed under the administration of Prime Minister Takeshita Noboru. |
| April 1989 | A 3% consumption tax is introduced. Soon after, in June, Prime Minister Takeshita is forced to resign in the wake of an insider-trading and corruption scandal involving the human-resource company Recruit. |
| February 1994 | A plan to abolish the consumption tax and introduce a 7% national welfare tax is announced; however, the plan is withdrawn the day after its announcement due to a lack of coordination within the coalition government led by Prime Minister Hosokawa Morihiro. |
| November 1994 | During Prime Minister Murayama Tomiichi’s administration, the Diet passes a bill to raise the consumption tax rate from 3% to 4% and add a regional consumption tax of 1%. |
| April 1997 | The consumption tax rate is raised to 5% under Prime Minister Hashimoto Ryūtarō. |
| September 2008 | The Democratic Party of Japan, led by Hatoyama Yukio, is elected to power on an election manifesto pledging no consumption tax hikes for four years. |
| June 2010 | After Kan Naoto takes over leadership of the DPJ, just prior to the upper house election, the party announces the consumption tax will be increased to 10%; the DPJ suffers a crushing defeat in the election. |
| June 2012 | The government of Prime Minister Noda Yoshihiko introduces a bill to raise the consumption tax rate to 8% in 2014 and to 10% in 2015. On August 10, the upper house plenary session approves the bill. |
Consumption Tax Rates and Overall Tax Revenue Over Time
Notes: Based on data published by the Ministry of Finance. Pre-FY2010 data are reported figures, FY2011 data are revised estimates, and FY2012 data are estimates.
- [2012.09.28]
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