LAND TAX REFORM IN JAPAN

Abstract

Land tax reform in Japan was a most controversial issue in 1990, reflecting the problem of the sharp rise of land prices that began in the late 1980s. The Japanese government established the Sub-Committee on Land Taxation under the Tax Advisory Commission in April 1990 to promote a comprehensive study of the land tax system on the basis of such tax principles as equity, neutrality and simplicity. The final report was published in November after a very intensive seven months discussion, and in April 1991 the Land Tax Law was enacted in the Diet. The aim of this article is to examine the movement of land tax reform and to clarify the contents of the reform package that the Sub-Committee presented as its basic recommendations. The main ideas of the proposals in the final report will perhaps continue to attract attention as a reference point for future reform of the land tax system. A sharp rise in land prices began in the late 1980s, causing a number of land-related problems within_the Japanese economy and societies. In 1990, heated arguments occurred in the government and the private sector in an attempt to seek any effective policy means with respect to reducing land prices. From the expectation that land taxes should play a substantial role in calming the increased tempo of land prices, particularly in the urban areas, Iand tax reform emerged as an important measure.