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Japan's FY 2020 revenue hits record $549 bil. on tax hike effect

This file photo shows Japan's Finance Ministry in Tokyo. (Mainichi)

TOKYO (Kyodo) -- Japan's tax revenue in fiscal 2020 increased 4.1 percent from a year earlier to a record 60.82 trillion yen ($549 billion), thanks largely to a consumption tax hike in 2019, the Finance Ministry said Monday.

    Consumption tax became the largest contributor to overall tax revenue in the year through March, as the full effect of the country's raising of the duty from 8 percent to 10 percent in October 2019 has finally shown.

    Corporate tax revenue also helped lift overall revenue, turning out to be larger than expected as a result of firm business earnings despite the coronavirus pandemic, according to the ministry.

    The previous record for the total revenue was 60.36 trillion yen in fiscal 2018. The figure surpassed the government estimate of 55.13 trillion yen and rose from the 58.44 trillion yen collected in fiscal 2019, according to the ministry.

    Consumption tax revenue expanded 14.3 percent from the previous year to 20.97 trillion yen. It topped 20 trillion yen and became the largest component, both for the first time since the tax was introduced in fiscal 1989 at a rate of 3 percent.

    Among the sources of the government's income in the reporting year, corporate tax revenue grew 4.1 percent to 11.23 trillion yen on the back of high profits mainly earned by the manufacturing sector, a ministry official told reporters.

    Given lackluster business performance and weak consumer spending in the early stage of fiscal 2020 amid the initial economic fallout from the virus, the government estimated in December the year's tax revenue to be 55.13 trillion yen. It cut by over 8 trillion yen its projection made before the pandemic.

    Income tax revenue inched up 0.1 percent to 19.19 trillion yen, with a decline in taxes on salary and dividends offset by a gain in duties on stock sales.

    As a result, the government had a budget surplus of 4.54 trillion yen, marking a record high. At least half of the amount is expected to be used to pay back government bonds as stipulated by law.

    For fiscal 2021 through next March, the government expects tax revenue of 57.45 trillion yen.

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