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ECONOMY > Economic Indicators

National burden rate estimated to hit historic high in FY2020

  • February 27, 2020
  • , Tokyo Shimbun , p. 6
  • JMH Translation

On Feb. 26, the Ministry of Finance announced its estimate that the national burden rate in FY2020 will be 44.6%, a 0.7 percentage point increase from FY2019. The national burden rate is the ratio of taxes and social insurance premiums paid by individuals and companies to their total income. The estimate is the highest since FY1970, the earliest year where comparable data is available. The increase is attributed to the fact that the consumption tax increase, which took place in October, only affected half of the year in FY2019, whereas it will impact the entire year in FY2020. The ministry explained that even though the national income, the denominator in the calculation, will be greater thanks to economic growth, it will be outdistanced by the increase in the tax burden. If the estimate proves to be accurate, it will be the seventh straight year since FY2014 where the national burden rate exceeds 40%.

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