Abstract:
In this paper, we conduct a theoretical analysis of the consumption and income taxes from the viewpoints of efficiency and equity, we evaluate the past and present structure of Japan's consumption and income taxes, we consider the role of the consumption tax in stimulating the economy, in reforming the public pension system, and in achieving fiscal reconstruction, and finally, we make policy recommendations based on our findings. We find that the structure of Japan's current consumption and income taxes is problematic from the viewpoints of both efficiency and equity and make policy recommendations that will simultaneously improve both the efficiency and equity of Japan's tax system.