Since 1988 Japan has watched the percentage of taxes collected as a result of income tax increase and then decrease 10%.

In 1988 (I had been in Japan for about 4 years) the income tax ration was 32.% of Japan’s collected taxes. It grew during Japan’s bubble days to 38.65 in 1993 but now sits at 10% less than that - 27.9%.

The question then is - where does Japan get her taxes.

Answer: Corporate Income tax.

Wrong answer - Corporate income tax shrank from its largest portion 34.3% in 1998 to its present 23.5%. 2003 was the lowest at 20.1%. Perhaps when the corporations got a break, things started to turn around.

So, where does Japan get the extra tax revenue.

Answer: Consumption Tax or Sales tax.

In 1993 the percentage collected was 17.7%. It is nearly twice that now at 32.3%. In other words - the government starts seeing more income as Japan loosens her purse strings. And loosened she has.

Watch for the amount in the tax coffers to continue to grow as Japan goes back to its buying ways.

What do you think?

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