After World War II, Japan adopted a tax system relying mainly on direct taxes, like those in the United States and the United Kingdom. The most important of these are the income tax and corporation tax. General government revenues amounted to 29.3% of GDP in 2001 according to IMF estimates, the lowest figure among the major industrialized countries. Expenditures amounted to 36.6% of GDP the same year, creating a deficit amounting to 7.3% of GDP, the highest among the major industrialized countries. Since the mid-1960s, when Japan abandoned a balanced budget policy, the government has relied on bonds to finance its budget deficit.
The National Tax Administration Agency, a branch of the Ministry of Finance, administers income and corporation tax laws. In addition, the Tax System Council files recommendations for revision of the system every three years. Individuals are subject to a national income tax as well as local (prefectural and municipal) residence and business taxes. In 1996, income tax rates ranged from 10% on taxable income of ¥3.3 million or less to 50% on income over ¥30 million. By 2001, the top rate had been reduced to 37%. Combined local taxes are applied at the rates of 5% to 15%. In 1993, the national corporate income tax rate was 37.5%, with a local inhabitants tax of 17.3% to 20.7% and a local enterprise tax of 6% to 13.2%. By 2001, the corporate income tax rate had been reduced to 30%. These rates are exclusive of temporary surtaxes and a capital gains tax.
Additional national taxes include customs duties; a 5% value-added tax; a stamp tax; inheritance and gift taxes; a monopoly profits tax; a sugar excise tax; taxes on liquor, gasoline, and other commodities; and travel, admissions, and local road taxes.