Revisiting Postwar Taxation in Japan and its Contemporary Implications

Extract

For several weeks of the extraordinarily hot summer of 2010, Japan was embroiled in a stand-off between Prime Minister Kan Naoto, representing fiscal austerity, and Ozawa Ichiro, representing more spendthrift Keynesianism. Both sought the presidency of the DPJ in the September 14th party elections, with the winner becoming PM. Faced with dismal poll results in advance of the July Upper House elections, Kan was forced to backtrack on his commitment to raise the consumption tax and cut spending in order to balance the budget. But that remained the core of his policy over the long haul, with an immediate 10% cut to all government ministries now back on the table. By contrast, Ozawa preferred to throw money around in order to stimulate Japan's lagging economy and garner votes.