Land-tax reform (地租改正)

Land-tax reform refers to the tax system reform conducted by the Meiji Government in 1873. By this reform the right of private ownership of land was established for the first time in Japan; for this reason this land-tax reform had the aspect of the land system reform.

Old koso (annual tax), denso (rice field tax). The origin of land-tax goes back to 'So' of 'Soyocho system' (a tax system, corvee), the tax system which the Japanese nation under the ritsuryo codes, established through Taika no Kaishin (Great Reformation of the Taika Era) applied imitating Tang Dynasty. Here the meaning of 'So' refers to the land tax levied on the yield of the fields (kubunden [rice fields given to each farmer in the Risuryo system) as the object of taxation. Before the Meiji period it was called taso, koso, and so on.

Through Taiko-kenchi (the land survey by Hideyoshi TOYOTOMI) production capacity of lands was indicated by (crop) yield (production volume of brown (unpolished) rice) and depending on the yield, nengu (land tax) was levied. And on a cadastral register, direct cultivators on lands were registered and they were made to be persons in charge of tax burden.

The base of taxation of land-tax was crop yields and the yields were collected from the farmers, direct cultivators (payment in kind). And this collection was done in a lump sum as a unit of village through the murauke system (village-wide, collective responsibility for tax payment).

Investigation into the land-tax reform
From the beginning of the Meiji period officials in the Okurasho (the Ministry of Finance) and the Minbusho (the Ministry of Civil Affairs) were investigating into the implementation of the new tax system in which all the land would be levied and in which the government would make people pay in cash a fixed amount of tax. In 1870 Takahira KANDA also submitted 'A Proposal for Land-Tax Reform'; in the proposal he suggested to correct inequality in taxes among domains and make a fair tax system. However, this proposal was not put into practice because there were arguments for and against within the government; the main reasons for the opposition lied in that at that time it was believed that the authority to impose land tax or not lied in the feudal lords such as daimyo and that it was necessary to conduct a large scale land survey replacing the existing nationwide land survey before getting into the land-tax reform. However, Haihan-chiken (abolition of feudal domains and establishment of prefectures) was done in 1871 and landlords in Japan were cleared away and a big reason of objection disappeared. In the September of the same year the Ministry of Finance created the document titled 'To Seiin: On the matters of the abolition of the ban on trading and selling of farmland and establishing the tax collection system based on percentage' and submitted it to Dajokan Seiin, the Main Office of the preconstitutional Meiji government that became the Cabinet later, for approval; subsequently the ban on trading and selling of farmland was abolished by the government and the implementation of the land-tax reform was officially concluded as the policy of the Meiji government and the governent quickly made preparation for the enforcement of the reform.

Progress
In July 28, 1873, the Meiji government promulgated the Ordinance of Dajokan No.272 which consisted of the Land Tax Reform Law (made up of an imperial edict and one article stating the land tax will be 3% of the cash value of the land) and the regulation of land-tax reform in which concrete rules were laid down; in the following year the government started the land-tax reform.

The government initially ordered individual farmers to report details on their land because the government was concerned about farmers' objection on the nationwide land survey. That is, the government adopted the method in which farmers to measure the plots of their land themselves, calculate their yield, and submit the results to local tax officials and the local officials were to examine the reports based on the previous examples described in the instruction book and upon the completion of this inspection, the local office was to issue the new land certificate. However, it became clear that it was difficult for the government to reach the goal of collecting land tax uniformly and fairly throughout the country and that the result of the land-tax reform of 1874 made the government know that it was difficult for the government to secure the amount of land tax it had aimed at. In addition, the problem of 'dividing the Ministry of Finance' cast a shadow into the land-tax reform; that is, the organization responsible for the land survey and the organization responsible for calculating amount of tax were separated owing to the establishing of the Ministry of Home Affairs; this split was the product of the political dispute.

For this reason, the government founded the Land Tax Bureau between the Ministry of Home Affairs and the Ministry of Finace in1875 and changed its policy to moving agressively for advancing the land-tax reform centering on the newly created Land Tax Reform Bureau (No. 32 of the Transmittal of Dajokan [Grand Council of State] of 1875).

In this aggressive approach, each prefectural government made the average yield per tan that the Land Tax Reform Bureau figured out beforehand be the absolute condition of assessment and in case the reported amount was under the average tan that the Land Tax Reform Bureau figured out, each prefecture denied the reported value of the land, of which farmers assessed with their own labor and expenses and made the value of the land change forcibly; for this reason, including the Ise Revolt large scale riots erupted frequently in various places. (Peasant revolts against the land-tax reform) In response to these revolts, the governments decided to lower the land-tax rate from 3 percent to 2.5 percent.

The hardline stance of the government continued through 1878; but the strict stance was gradually eased as the government was able to have the prospect of receiving revenue from tax and the work of reformation of arable land and the residential land was completed in 1880. The land-tax reform was a great undertaking which took about seven years.

Differences between the previous taxation and the new land-tax
As mentioned before, koso until Edo period was rice by the system of payment in kind and the producers were tax debtors. In addition, the tax system was not unified across the country and each region had a different tax system. These systems were revised to nationally uniform tax levy system where landowners paid money according to the land value through land-tax reform.

The points of the new land-tax were as follows.

The basis of taxation was not the actual crop yield but the cash value of the land based on harvest potential.

In the new land-tax system, the system of imposing taxes on each village within the local community as a unit of taxation was abolished and the taxation was to be made to individual unit of land.

The tax system of paying with crop yield was changed into the system o paying taxes in cash.

The tax rate was calculated with a fixed rate to the value of the land; the rate was 3%; in deciding this percentage, the Meiji government figured out with 'the goal of receiving the tax revenue which was not below that of the Edo Shogunate received.'

Instead of cultivators, by ensuring through the issuing of certificate of land title, the landowners (landlords) were made to be tax debtors.

The system was made to be a nationally uniform one.

The influence of land-tax reform. The securement of stable tax revenue. By specifying a certain tax rate for land price, tax revenue did not fluctuate by the crop yields of agricultural crops like before and the government could secure stable tax revenue. To be more precise, it can be said that the risk of price fluctuation of agricultural crops was passed on to farmers from the government. Furthermore, by the policy of 'the tax revenue will be not be below that of the tax revenue that the Edo Shogunate received,' the high tax rate of 3% was calculated; upon hearing this high tax rate, Takayoshi KIDO opposed the rate up to the last minute saying that the rate will drive the farmers into the more dire situation than they faced under the Edo Shogunate government; yet he belonged to people who promoted land-tax reform actively.

In terms of the consequence, this high tax rate resulted in increasing the burden of majority of the farmers; therefore, peasant revolts against the land-tax reform erupted including the Ise Revolt, Makabe Revolt; the part of the reason these revolts occurred lied in that the government virtually confiscated common land (iriaichi) from which the government could not expect to receive taxes; these revolts gave influence to the Jiyu MInken Undo (Movement for Liberty and People's Right). For this reason, the government lowered the tax rate from 3% to 2.5% as mentioned earlier and it was Toshimichi OKUBO who advanced his opinion on lowering the rate to the government because he was afraid of the collusion of the revolts of samurai or ancestors of samurai and peasants' revolts.

The beginning of private landownership. The issuing of certificates of land titles led to recognition of private landownership. As a result, the idea in that all land was under the sole ownership of the emperor and individuals were merely borrowing the land from the emperor or the idea in that feudal lords had the land ownership or the idea of cooperative ownership by local communities such as villages were completely collapsed; private land ownership by individuals was recognized legally for the first time in Japan; and land came to be treated as the objects of circulation or collateral as the property of individuals. In this sense, it can be said that land-tax reform is the first important step in establishing the foundation of capitalism system in Japan.

In addition, before land-tax reform, the government legalized buying and selling of land by lifting the prohibition of sale and purchase of farming land which was already lacked in substance in 1872; in 1873 the government also legalized the borrowing and lending of money by using land as collateral by setting the regulations on pawing and listing real estates and regulations on listing movable property and real estate property for borrowing and lending of money and goods.

Enfranchisement for landowning class. By making landlords to be tax debtors, traditional village contract system disappeared. Making landowners pay tax meant giving them suffrage rights; accordingly, the landowning class was given a certain political power.

When Imperial Diet was held later, at first election franchise for House of Representatives or entitlement of councilor of large taxpayer in House of Peers were given to many of such landlord class.

Influence on commerce and distribution
The land-tax reform also had a large effect on Japanese commerce and distribution system; that is, prior to the reform rice collected as tax from various clans were sold and distributed by wholesale dealers in Edo or Osaka through storehouses of various clans in Edo or Osaka; the reform allowed farmers to change their rice to cash directly at local rice merchants, who sold rice to the market across the country; thus the previous distribution system collapsed.

The others. Land-tax reform levied all the lands and denied Onsho (reward grants) or tax exemption for territories of temples and shrines, which had been approved before. By Kaiho Rei (Emancipation Edict), which had been put in force before this, the lands of Eta (one group comprising the lowest rank of Japan's Edo-period caste system (people whose work usually involved handling human bodies or animal carcasses)) and Hinin (one group comprising the lowest rank of Japan's Edo-period caste system (often ex-convicts or vagrants)), whose land appointment was omitted, were also treated likewise. And iriaichi (common land) and so on were also denied and incorporated into national land.

In addition, because the government assumed that there existed in Japan the same structure of farming society with those existed in Europe and America, undesirable outcomes came to exist, too. For example, the standard of management of common farming household in calculation of land-tax was made to be a farming household in which expanded reproduction was done by family-run commercial production and that landlords and tenant farmers were linked by free contract tenant farming; and the increase and decrease of farm rent were legalized on the assumption that the increase and decrease of the rent corresponded to the increase and decrease of land-tax. In fact, this assumption proved to be incorrect in the Japanese agricultural society where the position of landowners were strong and reproduction was suppressed under the idea of 'let the farmers live only well enough to work but don't kill them'; In addition, because the production expense was estimated lower than the expense required in the actual calculation of land-tax, together with high tax rate, land-tax put pressure on the production expense and as the result, the land-tax made the farm rent jump; (in the price level at the time, nearly the one third of the crop yield was equivalent to the 3% of the land price, and because the landowners added their profit on top of this, the farm rent increased as the result).

Furthermore, in the regulations and so on, the government itself actually admitted that 3% was a high rate. The government explained in writing that the current tax rate is a tentative one until the revenue from trade and manufacture such as documentary stamp tax and commodity tax gets on track and that in the future the tax rate will be lowered as the revenue from trade and manufacture increase and as the financial expenditure is restrained and that ultimately the government is planning to lower the tax rate to 1% (in the article 6 of the Regulation of land-tax reform [1873]; this article was abolished in the Regulation of land-tax, which was established later [1884]). However, in reality, the government was not able to lower the tax rate so easily. Moreover, in the regulation of land-tax which was established later replacing the regulation of land-tax reform, the provision, in which the intention of lowering the tax rate was stated, had been deleted by the government. This deletion of the provision invited Jiyu Minken Undo (Movement for Liberty and People's Right) and fierce criticisms against the government in the initial Imperial Diet; in addition, it became a cause of a series of tax increase of brewery tax as the financial resource to replace land-tax.

Making of certificate of land title. A result of the land surveys implemented by the land-tax reform was recorded on the certificate of land title and the content was recorded in a registry of certificate of land title. Certificate of land title notarized landownership and indicated tax debtors and was regarded as legal measures for selling and buying lands and thus circulation of lands and land finance were all done by certificate of land title.

After the Real Property Registration Act was enacted in 1885, the registry of real property became that which to notarize the land ownership.

In addition, the registry of certificate of land title itself was succeeded by cadaster system which was found in 1884; and in 1889 the registry system of certificate of the land title was virtually abolished; afterwards, collection of land-tax was carried out by this cadaster system.

Furthermore, the cadaster was to be unified with registry and came to be abolished in 1960. At that time, the description on the indication of lands listed on cadaster (address, lot number, land classification and acreage) was transferred to the title part of registry. Therefore, it can be said that current registry of land goes back to the original certificate of land title and the registry of the certificate of land title created when land-tax reform was implemented.

However, the details of survey at the time of land-tax reform were not necessarily accurate; it was because the survey technique used was primitive, people who were not the specialists for survey engaged in the task owning to the constraints of time and human resources, and there existed people who deliberately underestimated their land to deduce tax. This inaccurate survey resulted in disagreement between the record in the registry and the actual topographical shape of the land or the surveyed area; (these inaccuracies are referred to 'nawa nobi' (rope stretching) and 'nawa chijimi' (rope shrinking).

Currently, nationwide land registry investigation is underway to create an accurate registry.