Research On Japan’s Consumption Tax Reform By Political Economics

The Japanese government has repeatedly tried to the consumption tax reform. Since 1989, the consumption tax increase success in 1997 and 2014. However, the consumption tax reform also pay a political price. This paper analyzes the Japanese consumption tax reform,through the use of new political economics and new institutional economics and inclouds the Japanese consumption tax reform’s causes, process and the effects of tax reform. The key of the paper is using the game theory to analyze the political game process of tax reform.The reasons of Japanese consumption tax reform mainly include social reasons, economic reasons and political reasons. For Japan facing the aging population, Japan’s social security expenditure expands year after year, caused a serious fiscal expenditure burden.The financial deficit and debt problem increasingly serious because the economic downturn in Japan. Japan’s current political system leads the consumption tax reform to be hard.The political game of tax reform includs the ruling party, the voter, the opposition party and the group of special interests.The ruling party in the consumption tax increase tax reform, it is necessary to are considered and the game of the game structure, but also the comprehensive consideration and the game proceeds of the game, but also need to consider the game of information structure, limited rationality and external conditions, such as.The effect of the reform divided into economic effect and political effect. Economically, the consumption tax increase after tax is usually in the short term to push the high price level, reduce the consumption and the economic decline, but from looked for a long time consumer spending and the economy generally rebounded to pre tax gain level. Politically, the Japanese consumption tax increase reform is always make the ruling party lost the support of voters, that brought down the tax cabinet.