The land tax is the principal source of revenue. It was originally fixed at 3% of the assessed value of the land, but in 1877 this ratio was reduced to 2½%, on which basis the tax yielded from 37 to 38 million yen annually. After the war with Land Tax. China (1894-1895) the government proposed to increase this impost in order to obtain funds for an extensive programme of useful public works and expanded armaments (known subsequently as the “first post bellum programme”). By that time the market value of agricultural land had largely appreciated owing to improved communications, and urban land commanded greatly enhanced prices. But the lower house of the diet, considering itself guardian of the farmers’ interests, refused to endorse any increase of the tax. Not until 1889 could this resistance be overcome, and then only on condition that the change should not be operative for more than 5 years. The amended rates were 3.3% on rural lands and 5% on urban building sites. Thus altered, the tax produced 46,000,000 yen, but at the end of the five-year period it would have reverted to its old figure, had not war with Russia broken out. An increase was then made so that the impost varied from 3% to 17½% according to the class of land, and under this new system the tax yielded 85 millions. Thus the exigencies of two wars had augmented it from 38 millions in 1889 to 85 millions in 1907.
The income tax was introduced in 1887. It was on a graduated scale, varying from 1% on incomes of not less than 300 yen, to 3% on incomes of 30,000 yen and upwards. At these rates the tax yielded an insignificant revenue of about Income Tax. 2,000,000 yen. In 1899, a revision was effected for the purposes of the first post bellum programme. This revision increased the number of classes from five to ten, incomes of 300 yen standing at the bottom and incomes of 100,000yen or upwards at the top, the minimum and maximum rates being 1% and 5½%. The tax now produced approximately 8,000,000 yen. Finally in 1904, when war broke out with Russia, these rates were again revised, the minimum now becoming 2%, and the maximum 8.2%. Thus revised, the tax yields a revenue of 27,000,000 yen.
The business tax was instituted in 1896, after the war with China, and the rates have remained unchanged. For the purposes of the Business Tax. tax all kinds of business are divided into nine classes, and the tax is levied on the amounts of sales (wholesale and retail), on rental value of buildings, on number of employees and on amount of capital. The yield from the tax grows steadily. It was only 4,500,000 yen in 1897, but it figured at 22,000,000 yen in the budget for 1908-1909.
The above three imposts constitute the only direct taxes in Japan. Among indirect taxes the most important is that upon alcoholic Tax on Alcoholic Liquors. liquors. It was inaugurated in 1871; doubled, roughly speaking, in 1878; still further increased thenceforth at intervals of about 3 years, until it is now approximately twenty times as heavy as it was originally. The liquor taxed is mainly sake; the rate is about 50 sen (one shilling) per gallon, and the annual yield is 72,000,000 yen.
In 1859, when Japan re-opened her ports to foreign commerce, the customs dues were fixed on a basis of 10% ad valorem, but this was almost immediately changed to a nominal 5% and a real 3%. The customs then yielded a very Customs Duties. petty return—not more than three or four million yen—and the Japanese government had no discretionary power to alter the rates. Strenuous efforts to change this system were at length successful, and, in 1899, the tariff was divided into two sections, conventional and statutory; the rates in the former being governed by a treaty valid for 12 years; those in the latter being fixed at Japan’s will. Things remained thus until the war with Russia compelled a revision of the statutory tariff. Under this system the ratio of the duties to the value of the dutiable goods was about 15.65%. The customs yield a revenue of about 42,000,000 yen.
In Other Taxes. addition to the above there are eleven taxes, some in existence before the war of 1904-5, and some created for the purpose of carrying on the war or to meet the expenses of a post bellum programme.
Taxes in existence before 1904-1905:—
| Name. | Yield (millions of yen). |
| Tax on soy | 4 |
| Tax on sugar | 16¼ |
| Mining tax | 2 |
| Tax on bourses | 2 |
| Tax on issue of bank-notes | 1 |
| Tonnage dues | ½ |
Taxes created on account of the war (1904-5) or in its immediate sequel:—
| Name. | Yield (millions of yen). |
| Consumption tax on textile fabrics | 19½ |
| Tax on dealers in patent medicines | ¼ |
| Tax on communications | 21⁄3 |
| Consumption tax on kerosene | 1½ |
| Succession tax | 1½ |