The value-added tax in Japan: A numerical general equilibrium evaluation

Abstract

This paper describes briefly the structure of a static numerical general equilibrium model of the Japanese economy and tax system, and presents applications of the model to analyze a large tax policy change such as the introduction of a value-added tax in Japan. Efficiency, distributional, and revenue consequences of adopting five alternative forms of value-added tax with or without revenue-neutral adjustments are examined. The numerical general equilibrium calculations indicate that a value-added tax is a promising new tax instrument for Japan to reduce the public deficit and/or to lower the rates of existing taxes. J. Japan. Int. Econ., March 1988, 2(1), pp. 11–41. Department of International Relations, University of Shizuoka, Japan.