Impact of Taxation on Economic Growth in Japan

Ching, Ru Sin (2021) Impact of Taxation on Economic Growth in Japan. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

This study attempts to study the impact of taxation on Japan economic growth. This research also investigates the short-run and long-run relationship, as well as the causal relationship among the gross domestic product (GDP), taxes on income, profit and capital gain, taxes on international trade and taxes on goods and services by employing annual data over the period 1972 to 2018. Towards these purposes, this paper employed unit root test, error correction model (ECM) techniques, Granger Causality test and other diagnostic tests. The long-run estimation results suggest that taxes on income, profit and capital gain and taxes on goods and services have statistically positive significant impacts on GDP in Japan, while taxes on international trade is found negatively impacting the GDP. Lastly, unidirectional causality occurred between GDP and taxes on goods and services.