Japan’s April tax revenues see biggest monthly drop in over a decade

Analysts expect further slides over a protracted period as the coronavirus outbreak deals a heavy blow to the Japanese economy. — Reuters pic
Analysts expect further slides over a protracted period as the coronavirus outbreak deals a heavy blow to the Japanese economy. — Reuters pic

TOKYO, June 1 — Japan’s tax revenue dropped 29.4 per cent in April compared with a year earlier, finance ministry data showed today, posting its biggest monthly year-on-year decline since August 2009, after the payment deadline was pushed back due to Covid-19.

Analysts expect further slides over a protracted period as the coronavirus outbreak deals a heavy blow to the economy.

They said this raised the prospect of further debt issuance to make up the income gap as the government boosts spending in Japan, which has the heaviest public debt burden among major economies at more than twice its US$5 trillion (RM22 trillion) economy.

The government will submit a second extra budget to parliament early next week to fund a new, US$1.1 trillion stimulus package to soften the economic blow from the pandemic, Prime Minister Shinzo Abe said earlier today.

“Taking a long-term view, it will be necessary to take a proper look at the fiscal deficit,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

 Sera said she was worried about the long-term effect of accumulating more public debt, which could raise doubts about the sustainability of Japan’s economy.

A finance ministry official attributed April’s large year-on-year drop to a one-month delay of the deadline for filing annual tax returns, including for income tax. The delay in the income tax reporting deadline caused receipts of the tax to drop 88.5 per cent.

In April corporate tax receipts slipped 5.0 per cent on the year, while total tax revenue until that month stood at 52.3 trillion yen.

Japan lifted a state of emergency for Tokyo and four remaining areas last week after coronavirus infections slowed as it tries to reopen the economy. — Reuters

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