business

Gov't to announce 2019 sales tax hike to address debt mountain: reports

45 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© 2018 AFP

©2019 GPlusMedia Inc.

45 Comments
Login to comment

Oh, good grief! Change the flipping record Abe! He said exactly the same thing the first time he increased sales tax and it never happened. In fact, he has further increased the debt national debt twice since then. Why do people keep putting up with this liar?

15 ( +15 / -0 )

Here's a novel idea: raise taxes on corporations and high-earners to cover the small gap after you've eliminated bloated spending.

18 ( +21 / -3 )

Actually raising taxes is a good measure in today's Japan, but you need to be a trained economist to recognize the need.

-3 ( +3 / -6 )

Japans shopping confidence will drop significantly, bad enough no wage increase occurred.. All those luxury brand stores will see stores slowly closing.

Increasing any economy, should create the opportunity, lower sakes tax increases confidence. Japan in the 80s had 3% then it increased to 5% and Abe increased it to 8% and now 10%the only PM to ever do that.

12 ( +12 / -0 )

Same as last time, it won’t be just a raise of 2% but a hike of 10% on everything.

6 ( +10 / -4 )

To whom is all this debt owed?

-3 ( +3 / -6 )

Lol punish the lemmings to feed the corporations. I guess if at first you don't succeed, try ever again to wreak even more lives.

8 ( +9 / -1 )

@ebisen - Actually raising taxes is a good measure in today's Japan, but you need to be a trained economist (not your average English teacher, caring only about his next nett income) to recognize the need.

Is that so? How about those who care about how their taxes are spent? The only thing Abe has done since he became PM is decrease corporate taxes. Your pathetic little snipe about English teachers is totally unwarranted and should be removed by the moderators. I am an English teacher, but I'm also a small businessman and I am just getting burned by this government. People have less disposable income, which also decreases how much they spend on education (English or Japanese). This is the dark side of Abenomics. The first sales tax increase resulted in a 10-25% drop in consumer spending depending on the sector. This sales tax hike will result in a further reduction in consumer spending. It will create a major deflation in the Japanese economy and unless they take steps to curb the lack of consumer spending it will very quickly become an economic depression. Wait until after the Olympics. The Japanese economy is gonna take a huge dive. The middle class will virtually disappear. Mark my words.

17 ( +18 / -1 )

Actually raising taxes is a good measure in today's Japan, but you need to be a trained economist

Actually no. You just need common sense. Here I'll spell it out for you. If you earn 1000 yen and have never gotten a raise, and the government asks you for 10% of that while asking you to go out and shop to support a failing economy, will you gladly comply or hang onto your slim pickings?

11 ( +13 / -2 )

This tax increase will cause a huge increase in sales before the tax takes effect, and then watch for the crash after. Of course things like food and other necessities will continue to be purchased, but it will take years for consumption to return to normal. I can't understand this new rule about things purchased as convenience stores. If consumed in the store the tax is higher, but if it is taken out, the tax will be lower? What kind of tax system is that?

6 ( +7 / -1 )

Actually raising taxes is a good measure in today's Japan, but you need to be a trained economist to recognize the need

You mean like all of the trained economists who have guided Japan's economy to its stagnant status (now going on 30 years)?

1 ( +1 / -0 )

Address the debt mountain?

Prime Minister Shinzo Abe ruling LDP governments pledges and spending commitments has exhausted 2019 sales tax hike a number of time over.

Depopulation. over this incessant urge/obsession to revise Japan prised pacifist constitution should be this Government top policy priority.............

Hi, Burning Bush, Japans government bond liability is primarily owned buy its own citizens.

To have a full picture, thus accordantly understand and appreciate the risks, the pertinent question is how does the government service this debts annually?

If the debt has a low numerical value relative to tax revenues then the interest payments are low. However Japan’s debt is many times higher than tax revenue.

A quant can model out when a government tax revenue will not be sufficient to cover interest payments.

It is an outrage for any government to lumber its citizens, future generations, with debts of of this magnitude.

There is a sustainable limit for any government to increase national savings to purchase government bonds. That limit has been reached, the rest is the very quintessence of economic quicksand.

3 ( +4 / -1 )

Actually raising taxes is a good measure in today's Japan, but you need to be a trained economist, caring only about his next nett income) to recognize the need.

The number of times economic experts get their predictions wrong far outnumber the times they get it right.

If you think public spending / J economy will not take a hit after the increase despite Abe,s handouts to his J-Inc big boy cronies via a car tax subsidy and similar such bandage " solutions " you are way off. Also , the LDP ,s prowess in wasting govt funds on pork barelling guarantees the extra revenue will not be used on social security policies to anywhere the extent promised. Watch out for the military budget increases however if Abe gets his way.

In any other country voters would be sending Abe packing his bags come next election but TIJ with its mind numbing shooganai attitude so the average Taro who bothers to show up for the next election will still vote for the LDP and then complain about how times are tough. This place is true bizzaro world. Maybe its time to pack up and head for greener pastures as once the tax is raised and Olympics is over Japan has nowhere else to go but down. Still J-voters get what they deserve i guess. Beggars belief.

2 ( +2 / -0 )

@disillusioned - very well said.

5 ( +5 / -0 )

@ebisen - you clearly know nothing of consumer thinking, spending or saving.

5 ( +6 / -1 )

A Greek-style financial crunch will never happen in Japan where almost all of the government debt is financed domestically, whereas Greece borrowed heavily from other countries. Increased government debt means increased assets in the private sector. Breathtaking ignorance of those advocating consumption tax hike is just amazing.

6 ( +6 / -0 )

I'm curious who are these "citizens" that hold trillions of dollars worth government treasuries.

Someone please explain.

4 ( +5 / -1 )

For myself, just a consumer, I raced out to buy my Toshiba Vegeta refrigerator before the tax increase. I suppose I am not alone.

3 ( +3 / -0 )

Raise tax and increase subsidies. Not a pretty economic picture.

6 ( +6 / -0 )

How about cutting spending? No good?

6 ( +6 / -0 )

It all here Burning Bush, take your time, 2017 JPF has been audited. The overview is informative, it is difficult to explain without expressing a political opinion. Sorry

Japanese Public Finance FactSheet 2017

https://www.mof.go.jp/english/budget/budget/fy2017/04.pdf

https://www.mof.go.jp/english/budget/budget/index.html

1 ( +1 / -0 )

A hint of what's to come is in JPF factsheet section 3

Accumulated Government Bonds Outstanding......

2 ( +2 / -0 )

The world's third-largest economy has one of the highest debt-to-GDP ratios among rich nations. Much of it is held domestically at low interest rates, allowing Japan to avoid a Greek-style cash crunch.

Excuse me, one of the highest? No, the highest by a large margin, period. And this idea that somehow because it’s held domestically is fine is just non sense. Japan’s government has to service more than 400 billion dollars every year. Every year! This is a huge burden on the country and the reason why it’s in terrible financial shape.

The sole responsible of this huge debt is the LDP party which has ruled the country for more than 50 years. And now after having ruined the country, they want people to pay for it. The bureaucrats and politicians know that people won’t do anything about it because they have been formatted not to do so, and the LDP can continue its mafia-style management.

Look at the price of fresh food for world sake, how can they make it even more expensive by increasing the tax on it? This is madness, wages here for most people are simply not high enough for this sort of expensive cost of living.

0 ( +0 / -0 )

Disillusioned, thanks for the wise comment.

3 ( +3 / -0 )

You don't reduce the debt by increasing taxes, you reduce it by cutting spending.

7 ( +7 / -0 )

Let me be easy on those not getting the drift here:

Japan's social system is comparable with those from countries heavily taxing their citizens (have you ever looked into how much anyone in Scandinavia pays in taxes?), in a much more aged society..

-8 ( +0 / -8 )

Japan's social system is comparable with those from countries heavily taxing their citizens (have you ever looked into how much anyone in Scandinavia pays in taxes?)

No, school in Scandinavia is largely free, even college. Car and highway taxes are not through the roof. Wages and work/life balance are decent. Energy costs are cheap. There is no comparison.

8 ( +8 / -0 )

Japan has the world’s largest public debt by double the next country, which is the US. The Japanese government has been abusing public funds for decades. A lot of which has gone to fill private and corporate coffers. A lot of it has been distributed to corporations and private organizations as subsidies, most of which had gone straight into bank accounts. Have a look at the dilapidated public schools for a great example of how public funds have not been spent. Most were built in the last 30 or 40 years and have not been touched since. They’ll refurbishbthr desks and maybe change the blackboards, but that’s all. Very few have up to date multi-media equipment and those that do have been purchased through the PTA. The corporate fraud in Japan goes all the way to the top. These parasites have been sucking the people dry for decades just to fill theirs and their crony’s coffers. I can’t belive Japanese people have let this criminal organization go on for so long. All Japanese talk about the yakuza, but the government is much worse.

6 ( +6 / -0 )

Bank of Japan just needs to do some quantitative easing. No need for a tax hike then. Also create more yen and put it into the productive economy building and upgrading infrastructure. The extra taxes flowing in from increased productivity and consumer spending can be used to buy back bonds. No need for any tax rises then. Also cut military expenditure.

0 ( +1 / -1 )

Let me be easy on those not getting the drift here:

Japan's social system is comparable with those from countries heavily taxing their citizens (have you ever looked into how much anyone in Scandinavia pays in taxes?), in a much more aged society..

Seems like you are the one not getting the drift ....Japan,s social system is nowhere near comparable to Scandinavian countries...especially schooling and pensions...and the difference is only gonna get bigger due to LDP -govt mismanagement of pension funds as well as general finances and insatiable appetite for wasteful spending in order to buy election votes. Your LDP propaganda does not fly.

6 ( +6 / -0 )

The Crazy Train continues unabated! As I have been harping on here for many years, the govt wastes & pilfers a colossal amount of our taxes I figure waste runs at minimum 20-30% for any ministry, some much worse!

SO the govt has for decades received plenty in taxes to pay for things but it wastes so much THAT is why Japans debt is highest in the world.

One other place where funds SHOULD be taxed is the roughly 70% of J-companies who have NOT paid taxes for many many decades, BUT their employees sure as HELL have!!

Zeimusho, this is simple, AUDIT those 70% of companies properly & collect the taxes due!

There, now that I have given Japan the PLAN, just put on your damned NIKE's & DO IT!!

6 ( +6 / -0 )

"Ask not what your country can do for you - ask what you can do for your country"

-3 ( +0 / -3 )

Abe is despicable. Does he know that higher domestic spending is necessary to drive the Japanese economy (and thus drive more tax from sales)? Of course he does; he just doesn't care. Abe would rather decrease taxes on cash-hoarding J-companies and push the burden to small businesses and average citizens than do anything that would hurt himself or his corporate cronies. Increase corporate taxes and cut needless spending on more highways and other concrete throughout the country-- this is how you cut down debt.

8 ( +8 / -0 )

Raise our taxes and spend it on Japan's military "defense". I'm outta here. Just waiting for the right time.

I don't mind paying huge taxes, but if I do, I better get a taste of it. Free college, free medical, etc.

5 ( +5 / -0 )

So let me get this straight.

The Japanese government borrows money from the Bank of Japan.

And the Bank of Japan is owned by the Japanese government.

It's like having two bank accounts and just transferring money back and forth between them.

The tax hike is a scam.

4 ( +5 / -1 )

To whom is all this debt owed?

The bond holders.

So let me get this straight.

The Japanese government borrows money from the Bank of Japan.

And the Bank of Japan is owned by the Japanese government.

You didn't get it straight. The BoJ is partially privately owned by stockholders. The government borrows money from the BoJ by selling the BoJ bonds. The BoJ then resells the bonds to investors.

Cursory research goes a long way in not being in correct.

2 ( +2 / -0 )

The Bank of Japan does not directly underwrite it own debt “monetization”

The Bank of Japan repurchases in the secondary market. These bonds have a coupon of just 0.1% so this is the rate of return for pension savers.

Bond 350 is a example......

https://www.mof.go.jp/english/jgbs/publication/newsletter/jgb2018_04e.pdf

The Bank of Japan bulldozes the market, holding to date more than 40% of all central government bonds and outstanding bills.

https://www.boj.or.jp/en/mopo/measures/mkt_ope/ope_f/index.htm/

1 ( +1 / -0 )

This would be an extremely regressive tax - basically a one sided class attack on the poor.

Healthy food and necessities definitely should not be taxed. Tax those who can afford to buy luxuries at a higher rate. That’s fair.

5 ( +5 / -0 )

Raising sales tax is a drop in the ocean for solving the debt mountain.  Also raising taxes on Companies and high earners.  Japan tax rates already pretty high by global standards.  Raising them further on "top earners" will raise peanuts also.  What is needed is cut in waste and spending on useless projects.

Government here is ridiculously inefficient and there budget plans riddles with useless spending.  Better medical, better childcare support, incentivising families to have kids, targeted immigration.  If more money needed then taxes on luxuries and discretionary spending (tobacco, booze, luxury goods, cars, fuel etc.).

6 ( +6 / -0 )

What bothers me is they are increasing tax but not reducing the crazy wasteful public spending that goes on .

Recently I've seen signs being renewed or large stickers affixed for the Olympics which are completely unnecessary.

Example: Original signpost for junction - Ma-zaka - new sticker placed - Ma-zaka-hill.

I can't imagine the cost for every junction or signboard in Tokyo.... Insane

At my school there are already standing flags for Olympics and posters for the new characters.

These will be binned before they even start. No wonder the Olympics is running over budget.

As regards to social security, look at public workers pay and pensions, especially the fire service.

I've heard the nickname for firemen is 'Zeikin dorobo' - tax thieves.

3 ( +3 / -0 )

Ok, so who are these “investors” who own trillions of dollars in Assets?

0 ( +1 / -1 )

Good question, Burning Bush, part of the answer is contained within the Government Pension Investment Fund …....Fiscal 2018 1st quarter......

Review Investment assets and portfolio allocation....

Scroll down to investment return.......domestic bonds 0.14

https://www.gpif.go.jp/en/performance/pdf/2018_q1.pdf

https://www.gpif.go.jp/en/performance/latest-results.html

The answer to your question, hopefully you wont be liable.

However my family, my business, employees and moi etc etc, will, sooner or later pay one way or the other.

2 ( +2 / -0 )

So the government lends money from the GPIF.

And guess who owns the GPIF... the government.

Just like I said, they're transferring money from one account to another.

Just a big paper game.

0 ( +1 / -1 )

For Smokers the tax of 30 yen per pack has already happened. They should also increase the taxes on Saki, Shochu, Awamori that have not paid their fair share like Beer, Wine and Alcohol and not give tax breaks to them. All taxes should be same based on Percentages of Alcohol, beer and wine.

Food and health should never be taxed as that is an essential requirement for life.

Put taxes on stocks and bond purchases that only rich people have.

Make the Japanese 10% rich people hide their taxes.

They should legalize cannabis use and reap taxes off of it like so many states that hurt for money do

Saves money on prisons and jails and police

2 ( +2 / -0 )

So the government lends money from the GPIF.

And guess who owns the GPIF... the government.

Just like I said, they're transferring money from one account to another.

Just a big paper game.

Nope. It's been explained to you already. Now, go do some of your own research.

-1 ( +0 / -1 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites