Japan tax revenues hit 6-year high last fiscal year — source

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(Update 1: Fri 27/06/14 14:19:55)

TOKYO (June 27): Japan's tax revenues rose to the highest in six years in the last fiscal year as the improving economy boosted corporate and income tax revenue, a source said on Friday.

The increase may heighten calls from politicians to use the proceeds to make up for shortfalls from a planned corporate tax cut that will take effect next fiscal year.

Higher tax revenue could also help Japan pare its public debt burden, which is the world's largest, provided the government resists the temptation to spend that money on public works.

Tax revenues in the fiscal year that ended in March stood at 46.95 trillion yen ($463 billion), about 1.6 trillion yen higher than the government's initial projection, said the source, who has direct knowledge of the matter.

Corporate tax revenue is expected to reach around 10.5 trillion yen, more than the 10.06 trillion yen originally expected.

Revenue from income taxes is expected to rise to around 15.5 trillion yen, or 700 billion yen more than initially forecast.

Prime Minister Shinzo Abe's government will lower the corporate tax rate in stages starting from next fiscal year to somewhere below 30 percent to boost the corporate sector and attract foreign firms.

The move has raised some concerns Japan will have more trouble lowering its outstanding public debt, which is more than twice the size of its $5 trillion economy.

Government officials are considering how to make up for the tax revenue lost from a cut in the corporate tax rate, which is among the highest in the world at above 35 percent.

The rise in tax revenue for last fiscal year bolsters the argument among some in the government that a corporate tax cut can have a neutral impact on revenue as long as the economy grows strongly.

($1 = 101.38 Japanese Yen)