Confusion sure to rise as consumption tax hike looms

The Japanese verb kakekomi is typically used to describe passengers who make a frantic dash to catch a departing train. 

Recently, however, kakekomi has been applied figuratively to consumers who engage in 11th hour outlays on various items to avoid paying an additional 2% in consumption taxes, which will be taking effect from 12:01 a.m. on Oct 1, when Japan raises the tax on purchases of most non-food items from the current 8% to 10%. 

What Shukan Post (Sept 6) wants to know, is if you're standing in line at a convenience store at 23:59 p.m. on Sept 30, what's going to happen? And likewise if you check into a hotel on Sept 30, which tax will be applied to the room charge -- the former rate or the new rate? And how will unmanned transactions, such as at vending machines, be affected, and from when? 

Truly, the looming tax increase poses all kinds of tricky questions, and fortunately Shukan Post's writers have really done their homework. 

After posing the question re timing of the tax to the big three chains, the reporter was informed, "The applied tax rate will be based on the reading of the bar code scanner." To wit, if the customer carries a can of beer and some crackers over to the register, and the scanner reads the beer can at 11:59 and 59 seconds, the consumption tax will be 8%; and when the crackers are scanned at any time after 0:00, they will be taxed at 10%. 

On the other hand, if you enter a bar or izakaya on the evening of Sept 30, even if you carouse past midnight, the transaction for that evening will be based on Sept 30 and the 8% tax will reply. 

At a family restaurant, customers are advised to settle their bill by midnight in order to obtain the lower tax rate, because the 10% rate will be applied to transactions performed after midnight, the magazine said. 

If you take a train on Sept 30, even after midnight the old tax rate will apply. The railways don't plan to implement the price increase until the first trains begin running from the next morning. Likewise for the taxi companies. The meters will not be recalibrated until the driver goes off his shift and returns to the depot at some point in the early hours of Oct 1. 

Times Parking, an nationwide unmanned pay parking service, told the magazine it will raise its rates, but as it operates 18,000 parking lots, its machines will be adjusted incrementally, and for some customers it's possible that the old charges will linger for several days. 

As for mobile phone rates, NTT Docomo told the magazine it would apply the 10% tax "at the time the call ends," whereas SoftBank says it will stick with the 8% tax even if the call runs past midnight. 

Operators of deriheru (outcall sex services) are of the mind that as many late night transactions may stretch past the midnight hour, it's more practical to stick with the 8% rate and switch to 10% at the start of the next business day. 

The taxes on certain items will also vary depending on whether they are consumed on the premises or taken out. Even fast food operators are confused. What happens when a customers buys the meal (taxed at 10%) but can't find a table? Can he claim a 2% rebate? A spokesperson for Starbucks says if the customer presents their receipt, it will honor such a claim. 

Somewhat perplexingly, the tax on those small bottles of tonic beverages popular with Japan's salarymen may vary according to their classification. Oronamin C is treated as a carbonated soft drink and taxed at 8%. Lipovitan D, which is classified as a quasi-medicinal drink, will be taxed at 10%. Go figure. 

One item that Shukan Post does not appear to have addressed is the price for issues of Shukan Post that will go on sale after Oct 1. Will the magazine's current cost of 450 yen a copy go up? Or will its publisher, Shogakukan, absorb the difference? Readers are left to speculate.

© Japan Today