TOKYO: The Finance Ministry is preparing to lower its tax revenue estimate for fiscal 2016 from the initial figure of ¥57.6 trillion because of smaller-than-expected corporate tax revenue due to the yen’s rise, according to informed sources. The ministry is likely to cut the estimate by several hundred billion yen.
The downward revision would be the first in seven years since fiscal 2009, when the ministry cut the projection on the back of the global financial crisis. Corporate tax revenue has not been growing as fast as expected as Japanese companies’ earnings were hit by the yen’s rise in the April-September first half of the year, the sources said.
The nation’s tax revenue for the current year is still likely to exceed about ¥56.28 trillion in the preceding year, but the downward revision may affect the expansionary fiscal policy management of Prime Minister Shinzo Abe’s government. The government is expected to revise the tax revenue estimate this month when it compiles a third supplementary budget for the year, which will include additional spending on disaster-related restoration work. The government plans to cover the expected decline in revenue and the rise in expenditures with funds that have and will become available due to a decline in debt-servicing costs amid low interest rates, the sources said.
