By Takaya Yamaguchi
TOKYO (Reuters) – Japan’s tax revenues likely exceeded 60 trillion yen ($540 billion) to a record high in the year that ended in March despite the blow to the economy from the COVID-19 pandemic, two government sources told Reuters.
The bumper tax revenue could ease concerns about the coronavirus-hit to state coffers, possibly fuelling calls for further fiscal stimulus even though massive COVID-19 spending rolled out last year has added to the industrial world’s heaviest public debt burden.
The amount was bigger than the government’s initial estimate of 55.1 trillion yen and due largely to the boost to corporate profits from solid U.S. and Chinese economic recoveries, the officials said on condition of anonymity as they were not authorised to speak publicly.
The other two main components of tax revenue – sales tax and income tax – also topped earlier estimates, helping overall tax receipts exceed the previous record of 60.4 trillion yen seen in the fiscal year that ended March 2019, the sources said.
“This was a surprise. I expected tax revenue to fall due to the pandemic,” said Takuya Hoshino, senior economist at Dai-ichi Life Research Institute.
“This may encourage lawmakers to call for an additional extra budget around 10 trillion yen before the election later this year,” on top of about 30 trillion yen of last fiscal year’s stimulus budget that remained unused, he said.
While a global economic recovery helped boost corporate tax income in the latter half of last fiscal year, steady employment and rising stock prices may have underpinned private consumption that makes up more than half of the economy.
The October 2019 sales tax hike to 10% from 8% also helped boost tax revenue on a full-year basis in the last fiscal year, they said.
Despite being saddled with huge public debt at more than twice the size of its $5 trillion economy, Japan has rolled out three stimulus packages totalling $3 trillion over the past year to battle the health and economic crisis.
The spectre of lacklustre growth in the world’s third largest economy and a looming general election expected to be held later this year will keep the government under pressure to roll out even more stimulus. Some lawmakers are demanding a 26 trillion yen ($239 billion) extra budget.
($1 = 110.5400 yen)
(Reporting by Takaya Yamaguchi; Writing by Leika Kihara and Tetsushi Kajimoto; Editing by Shri Navaratnam and Jacqueline Wong)
