Discussion Papers 2022

CIRJE-F-1204	"Cross-Border Shopping, E-Commerce, and Consumption Tax Revenues in Japan"
Author Name	Adachi, Yoshimi and Hikaru Ogawa
Date	November 2022
Full Paper	PDF file
Remarks	Revised in January 2024; Subsequently published in Asia-Pacific Journal of Regional Science, volume 9, pages 605-627.

Abstract
This study estimates the impact of cross-border consumption and e-commerce on local consumption tax revenues for Japanese municipalities. Descriptive statistics reveal that, in 2019, expenditure through e-commerce accounts for 2.5% of household consumption expenditures, 9.1% in other municipalities in the same prefecture, and 6.1% in other prefectures, all of which are higher than the values five years ago. The main findings obtained from the panel data analysis are as follows: First, local consumption tax revenue per capita is significantly lower by approximately 0.3% in municipalities with 10% more consumption spending outside the municipalities. Second, the revision of rules for allocating consumption tax revenues in 2018 has the effect of favoring municipalities facing a consumption drain with a large population but low in-store sales.
Keywords: Cross-border shopping, E-commerce, Local consumption tax

Abstract

This study estimates the impact of cross-border consumption and e-commerce on local consumption tax revenues for Japanese municipalities. Descriptive statistics reveal that, in 2019, expenditure through e-commerce accounts for 2.5% of household consumption expenditures, 9.1% in other municipalities in the same prefecture, and 6.1% in other prefectures, all of which are higher than the values five years ago. The main findings obtained from the panel data analysis are as follows: First, local consumption tax revenue per capita is significantly lower by approximately 0.3% in municipalities with 10% more consumption spending outside the municipalities. Second, the revision of rules for allocating consumption tax revenues in 2018 has the effect of favoring municipalities facing a consumption drain with a large population but low in-store sales.

Keywords: Cross-border shopping, E-commerce, Local consumption tax