Abstract: The Japanese tax system has notably changed through the periods of post-World War II; i.e., reconstruction, rapid economic growth, and recent economic stagnation. In order to clarify the function and the effect of tax policy and practices, it is important to analyse how the Japanese tax system has developed during each period, and how it has contributed to the performance, good or bad, of the Japanese economy. In addition, it is necessary to assess successive rounds of tax reforms in the past because they have been greatly debated so far particularly concerning the adoption of Japan's value-added tax ( the consumption tax ). Many see a great need to reform the tax system to adjust for the ongoing changes in the Japanese economy. The tax debate is always with us in relation to the changing patterns of the economy.

Keywords: income distribution, inflation adjustment, Japan, Shoup Mission, tax, tax equity, tax erosion, tax policy, tax reform, value-added tax