Taxation and Economic Development among Pacific Asian Countries

By Richard A. Musgrave; Ching-Huei Chang et al. | Go to book overview
1. The use of accelerated depreciation for the equipment of export industries was extended.
2. The deduction for technical services transactions was extended.
3. Tax-free reserves for overseas market development were established.

It was not until the early 1970s that export-promoting tax incentives were largely eliminated from the Japanese tax system.


5. Conclusion

It seems that tax incentives were relevant factors contributing to Japan's high level of exports during the 1950s and 1960s. Specifically, it was not possible to establish a significant relationship between export trends and the use of special tax measures to promote exports over time. It would appear that nontax factors such as the competitiveness of export firms and industries, the role of the general trading companies, and the development of new products for overseas markets were responsible for Japan's superlative export performance. Even if no special tax incentives for exports had been enacted, export growth would probably still have remained at a high level.

Export-promoting tax incentives, however, clearly had a positive impact on the export activities of specific firms. From a micro point of view, certain traders and producers of goods for export greatly benefited from tax incentives, resulting in substantial revenue losses to the Japanese government and distortions of the tax system. It is uncertain whether such tax benefits to individual firms could have led to the increased trend of exports as shown in Figure 11.3.

In summary, although the effects of tax incentives on exports are ambiguous, their negative impact on tax neutrality is quite clear. In my opinion, there are few lessons to be derived from the Japanese experience with tax incentives for export promotion.


Notes
1.
In addition to tax incentives, government policies for the promotion of exports include import protection, export subsidies, financial aid and guidance to favored lines of production, and investment in export-related industries.
2.
It is said that in Japan, policymakers needed only an on-off switch to control the level of aggregate demand. With the special monetary restraint "on," demand waned; with the special restraint "off," demand quickly rebounded. No active stimulus for demand was required during the high-growth era. (See Ackley and Ishi, 1976, pp. 162-165.)

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Taxation and Economic Development among Pacific Asian Countries
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • 1 - Introduction 1
  • Notes 10
  • 2 - Indonesian Tax Reform, 1985-1990 11
  • Notes 41
  • References 42
  • 3 - The Tax System and Economic Development in Japan 44
  • Notes 61
  • References 62
  • 4 - Tax Reform in the Philippines 64
  • Notes 80
  • 5 - Tax Reform in Malaysia: Trends and Options 82
  • Notes 100
  • References 101
  • 6 - Property Taxation as a National Policy Tool in Taiwan 104
  • Notes 116
  • References 116
  • Notes 137
  • References 138
  • 8 - Effective Corporate Tax Rates on Capital Income in Hong Kong 140
  • Notes 153
  • 9 - Tax Policy and Business Investment: Taiwan's Manufacturing Industry 156
  • Notes 165
  • References 167
  • 10 - The International Dimension of Korean Tax Policy 168
  • Notes 191
  • References 192
  • 11 - Tax Incentives for Export Promotion in Japan, 1953-1964 194
  • Notes 207
  • References 208
  • 12 - International Aspects of Income Taxation in Taiwan 210
  • Notes 221
  • References 223
  • 13 - Financing Social Security in Singapore Through the Central Provident Fund 225
  • Notes 255
  • References 255
  • 14 - A New Role for Fiscal Policy and Tax Finance in Korea 259
  • Notes 275
  • References 276
  • About the Book 280
  • About the Editors and Contributors 281
  • Index 283
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