Japan's Tax Reform

Abstract

A tax reform influences households in many ways. Income tax reform influences the disposable income of households, and a reform of indirect tax influences the prices of goods and services. Furthermore, the changes in disposable income or in prices are thought to influence the consumption behavior of households. When a tax reform is enacted, one must not only evaluate the impact of the reform ex post facto but also must analyze it ex ante facto. It is likely that such an analysis will stimulate debate over the reform and lead to a more desirable reform. A series of simulation analyses that Homma (1986) attempted in the tax reform project of the Policy Design Forum was conducted with this thought in mind.