Taxation in Japan

The role of taxation in the transformation of the Japanese
Economy Introduction Before the Meiji restoration under the
feudal Tokugawa Shogunate, taxation was mainly a tool for
warfare and military power. The system was highly
regressive and pressed lightly on the rich and profit-earners.
It was calculated to preserve a very unequal distribution on
incomes and to stimulate the accumulation of private capital.
This tendency somehow continued and was magnified before
W.W.II when direct taxation was introduced for a more
equal and balanced system. However, the Meiji restoration
did bring with it tremendous changes to the tax system and
the use of the revenues. The Japanese government has since
had an active participation in the economy, yet not
controlling it directly but rather through market mechanisms.
It took responsibility for promoting economic growth by
using incentives and taxes collected in an effective way. The
often cited goal of taxation in western countries that was
equality was often sacrificed for the goal of economic growth
in order to prevent being colonized, then to pursuit the desire
to become an imperialist nation and then for pride and
export. The role of government and its fiscal policies played
an important role in the transformation of the Japanese
economy through the periods of Meiji restoration, before
W.W.II and post W.W.II period where taxes respectively
shifted from land taxes to internal indirect taxes to income /
direct taxes. (Fig 1) Period of Meiji Restoration During the
first years of the Meiji reforms, the government had serious
financial difficulties with tax revenues inadequate for its
massive commitments. In 1873, land reforms gave tittles to
landowners and customary tenants, freed the transfer and
sale of land from feudal restrictions and imposed tax
obligations equal to 3 per cent (which was lowered to 2.5%
in 1878) of the value of land. In addition a 30% local surtax
was imposed on the land... [continues]

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