TOKYO (Reuters) – Japan’s tax revenue dropped 29.4% in April compared with a year earlier, finance ministry data showed on Monday, posting its biggest monthly year-on-year decline since August 2009, after the payment deadline was pushed back due to COVID-19.

Analysts expect further slides over a protracted period as the coronavirus outbreak deals a heavy blow to the economy.

They said this raised the prospect of further debt issuance to make up the income gap as the government boosts spending in Japan, which has the heaviest public debt burden among major economies at more than twice its $5 trillion economy.

The government will submit a second extra budget to parliament early next week to fund a new, $1.1 trillion stimulus package to soften the economic blow from the pandemic, Prime Minister Shinzo Abe said earlier on Monday.

“Taking a long-term view, it will be necessary to take a proper look at the fiscal deficit,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

Sera said she was worried about the long-term effect of accumulating more public debt, which could raise doubts about the sustainability of Japan’s economy.

(For an interactive graphic on Japan’s state finances and G7 government debt, click: here)

A finance ministry official attributed April’s large year-on-year drop to a one-month delay of the deadline for filing annual tax returns, including for income tax. The delay in the income tax reporting deadline caused receipts of the tax to drop 88.5%.

In April corporate tax receipts slipped 5.0% on the year, while total tax revenue until that month stood at 52.3 trillion yen ($486 billion).

Japan lifted a state of emergency for Tokyo and four remaining areas last week after coronavirus infections slowed as it tries to reopen the economy.

($1 = 107.5400 yen)

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