The Japanese consumption tax experience: lessons for Australia?

Abstract

Great controversy has raged in Australia over the impact of the Goods and Services Tax at both the macro and microeconomic levels. In particular it has been argued that the tax imposes unacceptably high compliance costs on small businesses. Japan is said to be a country of small shopkeepers and so, not surprisingly, a similar controversy brewed when the Value Added Tax was first mooted for that country. To quell these concerns the Japanese consumption tax contains special features to minimize the impact on small business. This article explores whether there are any lessons for Australia from the Japanese experience.