Shigeru Sato is visiting LSE to research how resistance to taxation grew in post-war Britain.

I specialize in public finance and fiscal history (especially Japan and the UK). My research focuses on the history of tax and social security policy in Japan and the UK. In particular, I have been interested in how people’s trust in and resistance to taxes and social security is shaped. Some of these studies published in a book in Japanese under the title The Fiscal Studies of Tax Resistance (Iwanami Shoten, Publishers).

In that book, I study why the Japanese have always hated taxes. Despite the fact that Japan, like the US, has one of the lowest tax burdens in the world, ISSP surveys show that the Japanese perceive the tax burden to be extremely heavy. My research question is: why is the subjective sense of tax burden so heavy when the objective tax burden is so low?

Through an analysis of unpublished historical documents of the Budget Bureau of the Japanese Ministry of Finance (MOF), I have shown that the MOF managed its finances by guiding the tax burden to as low a level as possible to avoid people’s resistance to taxation. On the other hand, MOF stressed the principle of self-responsibility, that people are responsible for their own livelihood, not the state. Reflecting this legacy of policy management, the ratio of social security expenditure to GDP for working-age people is now very small.

On the other hand, it has been pointed out in social policy research that the more universal a social security policy is, the more likely that trust in the government and agreement to increase taxes will arise. Our econometric analysis of LIS and ISSP data confirms this point and shows that Japan has a more selective social security system than other countries, resulting in lower trust in the government.

Based on my previous research, I would now like to investigate tax resistance in the UK. The British experience offers us some very interesting lessons in terms of trust and resistance to taxation. Despite its early emergence on the stage of history as a strong tax state, since the 1950s the UK’s tax revenues (% of national income) has fallen behind that of the major European countries. Particularly in the 1960s, the gap with Scandinavia and parts of continental Europe, where the tax burden was greatly increased, became clear.

To explore the reasons why it is so difficult to build confidence in the UK tax system, I intend to analyse Labour’s policy management in the 1960s. As is well known, the Labour Party of the 1960s, adopting the most left-wing style in its history, tried to carry out major social security reforms but failed to do so. This is because it could not build an agreement to raise taxes. How did confidence in the UK’s tax system erode in the 1960s? What was the impact of the social security reforms led by Labour party in 1960s on confidence in the tax system? I will try to clarify these questions through an analysis of historical documents of the Labour Party and trade unions, and a statistical analysis of the results of various polls.