Here
and
Now

kuchikomi

Consumption tax burden will hit the poor

39 Comments

Japan was broke even before the earthquake-tsunami-meltdown. Now, of course, the situation is even grimmer. An aging, increasingly welfare-dependent society must reconstruct an entire region reduced to rubble. Where will the money come from?

One proposal being floated is a gradual consumption tax rise, to 10% by 2015, from the current 5%. The trouble with that, warns Josei Jishin (June 28), is the impact it would have on small business and on the relatively poor, defined as households earning less than 4 million yen a year.

The magazine enlists experts to evaluate just how hard the tax increases would hit. Tax accountant Takehiro Kikuchi makes it quite clear with this illustration: Households earning 2 million yen to 2.5 million yen a year, he says, last year spent on average 640,000 yen on food, while households earning 8-9 million yen spent 920,000 yen. The latter group earned four times as much as the former but spent only 1.5 times as much on food. Food being a non-negotiable necessity (though it can to some degree be skimped, with disastrous results, as we shall see), the consumption tax burden falls disproportionately on the poor, concludes Kikuchi.

Small businesses would suffer, he says, because the large corporations whose sub-contractors and suppliers they are would manage to pass the cost onto them. Competition at that level is cutthroat. Smaller businesses failing to serve the corporations as cheaply as possible do not survive. The two main cost-cutting measures open to them are salary cuts and layoffs. Again – the poor suffer.

One indication of how tight times are is “spending money.” It’s the wife, traditionally, who governs household finances. She takes charge of her salaryman-husband’s pay and doles out to him a monthly allowance. Lately this allowance has been decreasing steadily. The current average, Josei Jishin learns from a consumer expert, is 40,000 yen. A consumption tax rise is seen as likely to send it plunging still further. When that happens, even a convenience store bento lunch-box will seem expensive. Cheaper alternatives will be sought, and found in fast-food eateries that serve, for example, fried pork on rice – filling fare, but very low in nutrition. Forced to keep pace, the convenience stores, says the expert, will make the necessary adjustments to its bentos, making them cheaper, more filling and, inevitably, less nutritious.

The immediate health consequence of that will be a rise in “metabo” – metabolic syndrome, characterized by spreading waistlines and a host of lifestyle diseases, diabetes prominent among them. This in turn saps vigor and jacks up medical costs, brutally defeating the economizing intentions that led to the cheaper diet in the first place.

Josei Jishin is surely right to say a tax increase would hit the poor disproportionately and unfairly hard. What’s missing is a suggested alternative. Where is the needed money to come from?

© Japan Today

©2024 GPlusMedia Inc.

39 Comments
Login to comment

I dont like these arguments that husbands must buy lunch from a convenience store or restaurant everyday. If he is the only bread-winner, then Mrs Suzuki isnt working. Why she isnt able to put together a simple, cheap lunch for Mr S? Karage, rice with the ol' black sesame seeds and a simple salad - healthy enough for less than 200 Yen. Chuck in a litre of tea (about 10 Yen) and a couple of homemade cookies and he should be happy.

If I was earning so little, I couldnt justify taking 40000 to blow on whatever. Beer, smokes, pachinko whatever - no way baby. Thats 1/5 of your income! Drink at home, Japanese whiskey and soda - 40 Yen a cup and more than does the trick.

1 ( +1 / -0 )

I find it unusual that arguments about consumption tax focus on the cost of food. If you want the cost of food to come down then stop the tariffs and subsidies in farming. Open up to foreign competition and help the poor who are paying way too much for food,

0 ( +1 / -1 )

Open up to foreign competition

right.... then how would Japan "stay" self sufficient ?

0 ( +1 / -1 )

right.... then how would Japan "stay" self sufficient ?

It isn't now and never will be. And why would it want to be? No point at all.

-1 ( +0 / -1 )

What’s missing is a suggested alternative. Where is the needed money to come from?

Money to come from? not only from public pockets...Bank Of Japan, Politicians, Real Estate, Big Businesses and stop wasteful govt spending ...(etc).

1 ( +1 / -0 )

What’s missing is a suggested alternative. Where is the needed money to come from?

I was talking to a chap last night who is transferring from one ministry to another, one hundred metres down the road. He has had to spend the last week completing forms to make it "official". The astounding amount of bureaucratic waste here is one of the reasons the economy has been flatlining for a generation.

And there is as much chance of Megan Fox coming round naked with an offer in the next ten minutes as there is of the bureaucrats doing anything to change that. Result? Only solution is to shaft the workers to feed the yawning maw of the bureaucratic beast.

0 ( +1 / -1 )

In the midst of all this consumption tax talk, let's remember those greedy politicians in the Liberal Democratic Party who years ago drained the Social Security funds for their own purposes. Wonder if their loyal voters will remember this, too? To ease the burden on the average citizens of Japan, why not remove food from items that fall under the consumption tax umbrella? This would ease the burden on household budgets.

1 ( +1 / -0 )

An across the board consumption tax increase is the easy way out but it is also illogical and unfair. I have said it before, there should be different rates for necessities and luxury items.

2 ( +2 / -0 )

How about using the billion or more dollars that has been raised internationally and domestically to help victims of the earthquake/tsunami; that is, before it is frittered away by bureaucrats and the 'panels of experts' they are funding to analyze how to best use the funds!

0 ( +0 / -0 )

Dentshop, I used to do exactly that for my salaryman husband - homemade bento, in a cool box, with a big flask of mugicha. He said he didnt want it anymore, as it was embaressing as it looked like we couldnt afford for him to buy lunch out, and the other men in the office were teasing him that he didnt buy lunch from a combini. I promise I didnt make his onigiri look like anpanman, or anything shaming for a fully grown man. It cost me 200 or so yen a day to make a nice lunch for him, now he is spending at least 1000 yen a day on lunch and coffee. If food prices go up further, it is going to be very difficult, there will be no extra spending on anything.

0 ( +0 / -0 )

Gwragged- if your husband doesnt want it ill take it ;) I cannot justify spending arnd 1000yen on a lunch bento/restaraunt which consists mostly of carbs, with a tiny smattering of meat, that probably cost about 190yen to make. Usually where I can, I make my own lunch, aiming for around 400yen including afternoon snacks etc, far more nuitritious and satisfying. Finding the time to make it sometimes is a pain though.

0 ( +0 / -0 )

I strongly agree that a 10% sales tax will harm low income families, small businesses and the economy on the whole. People are already withholding spending and this will just entrench that behavior and amplify the negative impact.

There are very viable alternatives.

First cost cutting in the many areas where spending in Japan is both wasteful and ineffcient. This is unpopular with the politicians because it harms their special interersts and relationships. But we have seen examples, like Osaka's mayor who has been able to cut considerable costs by eliminating nonproducting projects and closing unused services.

If you raise consumption taxes, make them focused so that they do not harm the weakest people in society. Apply luxury taxes on non-essential items. Exempt food(including restaurants), daily necessities, drug store consumables and essential services from the tax increase.

And long term import and integrate more foreign labor to build the tax payer base in Japan.

Otherwise I see very dark results from this tax increase that may render Japan's global ranking to the mid double digit ranks.

1 ( +1 / -0 )

I agree with tkoind2. Forget increasing consumption tax. Focus on luxury tax on non-essential items!

0 ( +0 / -0 )

tkoind2, this is what i post in all these stupid postings. Why can`t the crats get their thoughts together? Regressive taxes hurt so many people. And basing tax on income is stupid too, as I have friends that make good money but paying alimony, child support, and a huge mortgage, and if you look at their entire portfolio picture they are actually pretty poor!

-1 ( +0 / -1 )

Ivan said: The astounding amount of bureaucratic waste here is one of the reasons the economy has been flatlining for a generation.

I'd take it a step further, and say that there is waste in all industries. In the mid nineties, U.S. companies went through considerable downsizing to remove waste. Japan needs to do the same at all levels.

Just yesterday I saw a very small souvenir-pastry shop at the station staffed by three people.

My friend gets his hair cut at his local barber, and there are always three people working there. One to cut the hair, one to wash the hair, and one to sweep the floor.

How many companies employ numbers of young females whose job it is to do nothing more than look pretty and serve tea?

Despite their best efforts to convince the world otherwise, Japan is a pretty inefficient country. There's plenty of ways to use resources more productively.

This article is spot on. Raising taxes will only make things worse. It will hit poor people the hardest, and the underlying economic problems which ail Japan will continue.

Japan needs to lower corporate taxes to attract more foreign investors, and join as many free trade agreements as they can. They also need to get rid of the huge subsidies on farming. Farmers get 40% of their income, on average, from government subsidies.

The whole of Japan is filled with waste, and raising taxes will only add to the problem.

1 ( +1 / -0 )

Well put gajininfo. Send your note to as many places as you can, as you know for sure the Crats are not reading JT.

0 ( +0 / -0 )

Not only will a sales tax hurt the low income bracket, it will lower consumption even more. I thought the government wanted people to spend more , not less!

Taxing the high income bracket or taxing savings would probably make more sense. But taxing savings in a Country where the interest rate is almost zero, might be a bit difficult.

What about taxing Energy?

-1 ( +0 / -1 )

y3chome, we cant justify spending 1000 yen a day on his lunch either, but I suppose he would rather tolerate overspending on lunch than being different from his workmates. I leave it there for him, if he doesnt eat it, then some other hungry family member/dog usually does!

If you use left overs from the previous nights supper, bento are even cheaper to make at home, and with a bit of work can be much nicer than anything you can buy in the shops.

It will lower consumption, we just bought new household goods and clothes, and dont intend to buy anything other than food and pay bills for the next year, Let the people who bought Tepco stock/created this disaster be liable for costs to the point of bankruptcy, then use the money that was donated, and then let the taxpayer make up the shortfall. If we had been asked in a referendum we would have voted against nuclear power, so why should we pay?

0 ( +0 / -0 )

I suppose he would rather tolerate overspending on lunch than being different from his workmates.

Check out something called "the latte factor." Even the most seasoned of homemade banto-avoiders would think twice about his or her lunchtime habits...

0 ( +0 / -0 )

An across the board consumption tax increase is the easy way out but it is also illogical and unfair. I have said it before, there should be different rates for necessities and luxury items.

I hear what you're saying on this, and I agree and disagree. However just something to keep in mind. In the 90s, in the US some Dems thought the same way you do, and increased taxes on luxury goods. Figuring they'd make the rich pay more. The unintended consequence of their actions however, was the collapse of several industries, and thousands of people out of work, as people quit buying those luxury items. Keep this example in mind when proposing taxes on luxury items. Too high a tax, and people stop paying for the items. Most luxury items are already taxed pretty heavily, if you raise those taxes even further, you are running a significant risk, of losing money as people quit purchasing the goods, and others lose their jobs because of it.

0 ( +0 / -0 )

Most luxury items are already taxed pretty heavily

In Japan it's the same 5% on everything.

0 ( +0 / -0 )

In Japan it's the same 5% on everything.

You sure about that? Last I heard it was significantly higher. I'm not living in Japan anymore, and when I was, I certainly never had the option to buy luxury anything, so I wouldn't know by direct experience.

0 ( +0 / -0 )

Molenir Jun. 25, 2011 - 12:22AM JST. Figuring they'd make the rich pay more. The unintended consequence of their actions however, was the collapse of several industries, and thousands of people out of work, as people quit buying those luxury items. Keep this example in mind when proposing taxes on luxury items. Too high a tax, and people stop paying for the items.

It's already been established that such a tax wouldn't raise any real money and that it would throw people out of work. It would also cause people to make behavior changes in reaction to the tax code rather than real economic efficiencies. People would lease rather than purchase as many people are already doing, endangering an industry and it would complicate an already complicated tax code. And you know what comes next after such a complication, a loopholes and further complications. This has been done before. It has turned out to be a poor idea every single time.

0 ( +0 / -0 )

There are still a few extras like car tax (that you have to pay every year), and tobacco tax (which should be much, much higher) but generally when the shohizei was brought in the buppinzei was abolished, making lots of luxury goods cheaper overnight.

0 ( +0 / -0 )

Is there any any poor Japanese? I never met one.

When I visited Japan, as a matter of fact I have just returned to US, I had many chances to go to Depachika of Isetan, Mitsukoshi, Tobu, Seibu for shopping. They were always all filled with customers buying expensive gourmet dinner items, cheese, wines and cakes. We never spend so much money for food here in US. .

0 ( +0 / -0 )

Taxing the high income bracket or taxing savings would probably make more sense.

So put more taxes on the people who are paying the most already. That sounds fair to you? Punish people who worked and studied harder.

-2 ( +0 / -2 )

Is there any any poor Japanese? I never met one.

lol You're not likely to either, if you haunt places like that.

Try hanging out in a local low-end discount supermarket instead of the places where people go to look affluent.

0 ( +0 / -0 )

globalwatcher; yeah all those living in blue tents have a Benz or BMW parked round the corner,

0 ( +0 / -0 )

Try hanging out in a local low-end discount supermarket instead of the places where people go to look affluent.

Is that the section in which shoppers buy eggs from the kawai-sou-chicken section?

Meanwhile, others'-- the affluent--eggs will jump from 350 yen to 385

0 ( +0 / -0 )

In Japan it's the same 5% on everything

and let us not forget the 5% tax added to "tax" for luxuries like imported leather. Piggy-back tax I believe it's called in some circles

0 ( +0 / -0 )

"Where will the money come from?"

China!

"a convenience store bento lunch will seem expensive"

This is foreboding.

"convenience stores... will make the necessary adjustments to its bentos, making them ... less nutritious"

It is not possible to make a convenience store bento less nutritious.

0 ( +0 / -0 )

Is this going to adveresely affect sales at Godiva and Gucci?

0 ( +0 / -0 )

let us not forget the 5% tax added to "tax" for luxuries like imported leather.

Added to the consumption tax?? Are you talking about the import duty? A totally different animal, that's added before the consumption tax.

Import taxes have very little to do with whether an item is a 'luxury'; it's all about protecting domestic industries and quid-pro-quo trade agreements. Leather today is not a luxury item; it gets into all manner of cheapo items. It used to be that if you had two items that looked similar, you could be reasonably sure that the cheaper one was artificial leather; not so today. It's getting harder and harder to avoid leather, because it's so cheap they use it in everything.

0 ( +0 / -0 )

There should be no sales tax on food to help poor. Everyone needs to eat. The sales tax should be applied to non essential and luxury items.

I am paying 7.8% on restaurant bills in my state in addition to 20% tips to serving waitress. Eating out is very expensive in the US. I hope Japan does not have to go to that far like US.

0 ( +0 / -0 )

Japan was broke even before the earthquake-tsunami-meltdown. Now, of course, the situation is even grimmer. An aging, increasingly welfare-dependent society must reconstruct an entire region reduced to rubble. Where will the money come from?

So why is Japan bidding on hosting the 2020 Olympics? I just dont get it...

0 ( +0 / -0 )

I totally disagree with luxury tax. Because who decides what a luxury is and why should it be taxed more. They already tax necessities highly in Japan. Rice has an enormous tariff on it. Remove that before you tax luxuries.

0 ( +0 / -0 )

How the government can raise money:

1) Slash politicians' salaries (average 20 million a year for diet members) by at least 70%. Politics is not about money, it is about caring for your country. Oh, and while we're at it, set an age limit for politicians at say 55.

2) Just empty the ministries' discretionary accounts, trillions of yen hidden away there. Should the ministries have their own secret coffers for their own secret little projects? I think not.

3) Create a progressive tax scale that taxes people with high incomes (say about 7 million) much more than today. You can raise the income tax overall a little bit, but rich people must pay more. Very low taxes on children's clothes, books and food. Alcohol and smokes, double the tax.

4) No child support to people with household incomes above 7 million. If you earn that much, you can pay for yourself.

5) Stop whaling. Emotional love-the-whales arguments notwithstanding, it costs 70 billion yen/year.

6) Create a law by which light and electricity in government buildings is turned off at 6PM. Who knows, maybe the bureaucrats could learn to work effectively and go home early and have a social life and you know, maybe even make a few babies.

7) Citizens committees (how about say 49 members chosen randomly from a census twice a year?) should decide whether or not meaningless projects like the Tokyo Sky Tree get the go ahead.

That's it for now (of course leaving out the fact that raising women's participation in society has been linked to higher growth rates and fertility rates in number of countries)...

0 ( +0 / -0 )

It is not possible to make a convenience store bento less nutritious.

Yes, it is!

You just eat the lot!

Cling film, expanded polystyrene, imitation bamboo leaves and the little plastic fish bottles that the soy sauce comes in.

Chug it down.

It's slightly less nutritious than the bento, but not by a lot.

And it does fill you up!

0 ( +0 / -0 )

I guess voting in a pay raise for the summer was a great indicator of how seriously any politician takes their duties.

0 ( +0 / -0 )

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