COVID-19 INFORMATION What you need to know about the coronavirus if you are living in Japan or planning a visit.
A Lawson convenience store employee changes labels on products in Shinagawa Ward, Tokyo, on Monday night. Photo: KYODO
national

Japan's consumption tax raised to 10% amid swelling welfare costs

61 Comments

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

© KYODO

©2020 GPlusMedia Inc.

61 Comments
Login to comment

Over complicated, which is a hallmark of Japan.

29 ( +32 / -3 )

Some critics have pointed out that it is paradoxical that the government is aiming to achieve fiscal consolidation on the one hand and is boosting public spending on the other hand in an attempt to prop up domestic demand.

This only makes sense to Abe and company. If I ran my household the way they run this country, I'd be in jail!

17 ( +19 / -2 )

This only makes sense to Abe and company. If I ran my household the way they run this country, I'd be in jail!

Or homeless and divorced.

19 ( +21 / -2 )

yes because we all know the Japanese government does not have enough money to waste right?

2 ( +5 / -3 )

The last time the consumption tax went up, defense spending went up as well. This time will be no different. The American military industrial complex is using Japan as a cash cow. Well, I'm not giving my 2%. I'll spend even less.

15 ( +19 / -4 )

This is another nail in the Japanese economy’s coffin. There will be a massive drop in consumer spending and the poor will become even poorer. The drop in consumer spending will also result in price increases further damaging the economy. The social welfare system is pretty much beyond repair and you will see an increase in premiums very soon. Furthermore, they will start hunting down all is pesky foreigners who have been dodging paying into the pension scam. I got a demand for my arrears last week. What a great retirement fund it is! You’ll get less than a 20% return on your retirement investment. That is not a pension fund! It is a blatant rip off!

12 ( +15 / -3 )

Well, Abe is voted by people, and has to do what the majority asked him to do. That is one aspect of democracy.

-15 ( +3 / -18 )

The complex scheme is also designed to promote cashless transactions in Japan

Fine, as long as I can continue using my Suica that isn't attached to my identity. But wait, if cash totally disappears, how do I charge my anonymous Suica? By bank transfer?.. which is attached to my identity.. Nevermind, keep cash in circulation.

4 ( +7 / -3 )

If at all, it should have been the other way round.

Higher tax for take-out than for eat-in.

With the current taxation, take-out is encouraged and with this an increase of plastic garbage.

Rather than aiming to reduce plastic waste, Japan is encouraging its increase.

8 ( +11 / -3 )

The drop in consumer spending will also result in price increases further damaging the economy. 

Err... nope...

Japan was in deflation because of the lack of spending.

Abe achieved the much desired inflation when taxes were raised to 8% because companies just added 8% on the already price + 5% tax.

This time too, companies will take the opportunity to raise the prices a bit.

20 cabinet reshuffles later and deflation kicking in, Abe or Koizumi (you know it is coming within a few years), they will wonder what happened...

1 ( +5 / -4 )

Finance Minister Taro Aso, as well as other senior government officials, have claimed that the government's steps are working effectively and there is no sign that the economy would be dented by the tax increase.

Same minister that choose to ignore FSA that find out old people need 20 milliion for their retirement fund.

8 ( +9 / -1 )

The end is near for Japanese government debt sustainability.

At some point in the future, Japanese government will be forced to raise taxes to 25% or default on debt.

All the money being sucked into welfare and debt service leaves Japan with no money to build its military, hence Japan must make peace with its neighbors now as Japan can't possibly keep up with China vs Korea arms race that's raging in East Asia now.

Korea's stealth fighter prototype is rolling out of factory in Spring 2021, while Japan government gave up on its own stealth jet due to lack of funds.

While Korea has a $30 billion triple layer indigenous missile defense system that Saudi Arabia seeks to import, Japan struggles to afford a $2.5 billion Aegis Ashore that leaves Japan with many holes to exploit(KN-23 ballistic missile with evasive maneuvers, SLBMs, cruise missiles, etc)

-1 ( +7 / -8 )

The issue with the government is that they have been legally bought by corporate Japan. Corporate Japan owns most of the government debt so they can't go after corporations for taxes. Therefore, they go after the people.

13 ( +14 / -1 )

Social programs cost real money. They aren't free. Enjoy it. You're paying for it.

1 ( +5 / -4 )

The cost of living has just increased here in Japan but my boss has no intention of increasing wages for the staff.

Japan has just got more expensive, not less, to live in.

When the sons and daughters of Japan are poorer than their parents then it is obvious that the system is not working.

15 ( +15 / -0 )

I predict a severe recession. My 2 cents

2 ( +7 / -5 )

A lotta wailing and gnashing of teeth over the 2% increase.Big purchase items make a significant difference,but with general items, if you can buy at 8%,you can afford at 10.Just people are stingy about money anyway,me included.

-9 ( +3 / -12 )

If this is anything like the last tax hike the economy will go straight into the toilet, they still haven't fully recovered from the last one too. I get the feeling that as the spending hits rock bottom they may find new "adjustments" to encourage spending, such as extending the cashless campaign.

4 ( +4 / -0 )

Over complicated, which is a hallmark of Japan.

HA!! Like the ubiquitous Powerpoint slides to explain the different rates in effect!

1 ( +2 / -1 )

This time too, companies will take the opportunity to raise the prices a bit.

This! Same happened last time. Prices increased more than the 3% increase. Anyway here we go, watch how the spending drops.

8 ( +8 / -0 )

Japan Govt. Could easily divert funds from where the investments are strongest without gauging the pockets of the People of Japan for more pennies. The let the People pay for starts to take its toll on the economy as a whole. Japan Govt in itself is not poor by any means having its on corporations in every sector imaginable.

2 ( +3 / -1 )

Kick the financial bomb can further down the road

8 ( +8 / -0 )

The drop in consumer spending will also result in price increases further damaging the economy. 

@TumbleDry - Err... nope... Japan was in deflation because of the lack of spending.

Do you realise how contractory this statement is? If companies are not making enough profit due to poor sales they will have to increase their prices, lay off workers, reduce already stagnent salaries or go bankrupt. Japan needs to stop relying on international markets that no longer belong to them and fix the domestic economy. People are already broke with no disposable income. You can only milk a cow so much before the milk dries up. The middle class of Japan is disappearing rapidly. This combined with the failure in social welfare spells disaster for Japan. At present, income tax, health insurance, city tax, pension and sales tax adds up to nearly 50% of a workers salary. That is criminally absurd!

8 ( +10 / -2 )

The complex scheme is also designed to promote cashless transactions in Japan

Fine, as long as I can continue using my Suica that isn't attached to my identity. But wait, if cash totally disappears, how do I charge my anonymous Suica? By bank transfer?.. which is attached to my identity.. Nevermind, keep cash in circulation.

They just want more and more information about your finance, once they start with mynumber they'll go further with people daily transaction. Tax hike just give them opportunity for them to do this through cashless promotion.

2 ( +3 / -1 )

Social programs cost real money. They aren't free. Enjoy it. You're paying for it.

They should be able to do that by the time they increase tax from 5% to 8% but it only happens when they increase 8% to 10% by that time they claim it's for social programs.

0 ( +1 / -1 )

Just ONCE I’d like to see an article by a Japanese news service on the staggering number of Japanese companies reducing product weight/quantity while not reducing the cost of the product. I imagine it’s already been done a lot in anticipation of the tax increase. I like to have a couple of cookies with my morning coffee on the weekends and this one brand has reduced the cream in the cookie making it bland while printing a big “NEW” label on it. Stopped buying it.

8 ( +9 / -1 )

The least smoothie ever, on the smoothie scale.

0 ( +0 / -0 )

Back in the UK we pay 20% sales tax. 10% is still way too low for a country like Japan with all its monetary problems.

-3 ( +4 / -7 )

You’ll get less than a 20% return on your retirement investment.

It's much worse than that; if you were born after about 1970, you will experience a net loss on your contribution payments. That is, you will receive less money than you put in over the years: a negative return.

All the money is going to the Baby Boomers and (particularly) the generation older than them, which is retired now and being supported by post-1970-born working people.

The situation only starts improving for people born after 2010, who have less of a burden during their working lives because they only have to support the smaller post-1970 generations.

A gigantic pyramid scheme designed to enrich two golden generations at the expense of everyone else. The prewar folks at least suffered through WWII and deserve the support of those of us who never experienced those times. But those born after? They voted their children into poverty.

6 ( +7 / -1 )

How about cut spending?

8 ( +9 / -1 )

Back in the UK we pay 20% sales tax. 10% is still way too low for a country like Japan with all its monetary problems.

Are you aware of the fact that there is much more tax and government fees we pay than just the sales tax? You cannot judge by a single tax. You have too look at the entire collection system of the government to decide if this is too much or too little. You also need to consider that the 10 percent is for EVERYTHING including food. I don't know if the U.K. government is so akin to the Sheriff of Nottingham or Stalin that it taxes food, but Japan does.

5 ( +8 / -3 )

You also need to consider that the 10 percent is for EVERYTHING including food.

Except it's not. As per the article "Food and drink except alcohol will continued to be taxed at 8 percent."

Restaurant meals eaten in are 10%, but not food at grocery stores.

1 ( +4 / -3 )

@Chee...

your Suica card is not anonymous...your name is written on it !

-3 ( +1 / -4 )

The employee in the image is replacing a pricing tag with an identical one. Is this intended to highlight just how confusing it all is?

4 ( +4 / -0 )

At the introduction of the consumption tax and at every increase the government have claimed that it was to cover welfare costs but very little of the money seems to have actually been used for this. Last time they raised the consumption tax they they said it was for welfare when if fact it was to cover the cost of lowering corporate tax. It is like the reconstruction tax that they introduced after the 2011 earthquake, as soon as the bureaucrats got their hands on the extra money they splurged it on other things, such are the factory ship for whaling or roads in Okinawa while people still live in temporary accommodation in Fukushima.

7 ( +7 / -0 )

@ Newpresident

You can choose if you want your Suica card to be anonymous or not.

5 ( +5 / -0 )

This morning, due to this tax hike,

I decided to limit my consumption and to invest more of my money outside Japan...

5 ( +5 / -0 )

Except it's not. As per the article "Food and drink except alcohol will continued to be taxed at 8 percent."

Excuse me. Yes I should have just generally said that the Japanese government taxes food like a diabolical tyrant rather than specified the 10 percent. It is indeed 8 percent but I am not finding that little sliver of savings very praiseworthy.

5 ( +5 / -0 )

Every time Abe does this it's off to Europe to celebrate

4 ( +4 / -0 )

I hate where,in the picture,it says 165 yen,but really you're paying 178 after tax, written small.Very deceptive and commonplace in Japan.Travel agencies love doing that scam too.Give me the all-in price one time and done.

9 ( +9 / -0 )

I really don't see the justification behind raising the tax and using the aging population excuse. If you see those that are still working, banks, offices, stores, you will find that the chiefs are all over the age of retirement and still working. What about making the over-payed DIET members who are already wealthy enough pay the tax. Surely this family business government system with the same family members in the DIET can afford it. Most of them are so old that they fall asleep during sessions. What about the talent people, make the retire so that younger folks who can pay taxes are giving the jobs, they can hire 2 to 3 people for the cost of the overpriced talent person on TV.

4 ( +4 / -0 )

With the every increasing costs for handling TEPCO's Fukushima disaster, you have to wonder whether pretty much all the income from this Tax Hike is going to go on that alone.

4 ( +4 / -0 )

This never stops irritating me. "We need to increase the tax to be fiscally responsible".

Then suddenly - wallop! The bill for the Olympics quadruples in size. Return to non-viable commercial whaling, subsidised by tax revenue. Fukushima keeps sucking up "recovery tax" and decanting it into the pockets of yakuza shell organisations.

Then two years later, it's "Whoops, we need to be financially responsible, and all the money's gone. Cough up, Mr taxpayer, do your civic duty. There's a hostess bar in Ginza with the cabinet's name on it".

6 ( +6 / -0 )

FizzBit: “Just ONCE I’d like to see an article by a Japanese news service on the staggering number of Japanese companies reducing product weight/quantity while not reducing the cost of the product.”

It’s happening all over;

https://www.buzzfeed.com/jp/christopherhudspeth/restaurants-and-food-products-thatve-hustled-scammed-and-1

2 ( +2 / -0 )

@Newpresident

your Suica card is not anonymous...your name is written on it !

Mine is anonymous. Eventually there won't be that option though, most likely. Some nut will fund a terrorist attack using an anonymous cash card and VRROOP! anonymous option taken away.

3 ( +4 / -1 )

Next solution would be to increase the sales tax to 15%. We are still waiting for addressing the root cause of problems not treating the symptoms.

5 ( +5 / -0 )

@chugmagaga

My wife and I have agreed that if the tax goes up to 15%, we're moving to my home state of Oregon, where there is no sales tax (except for 'vice tax'). The practice of taxing food is beyond repugnant to me.

4 ( +4 / -0 )

Abe-san, then​ why​ Did.you​ purchase​ F-35s If​ you​ need​ed money​ for​ an​ ageing population?!?!?! LM paid​ you​ plenty.... But​ none​ for​ the​ korei-sha!!!

2 ( +2 / -0 )

Yes, I agree with Cheeba. It will be 15% within 5 years is my prediction. First they will raise it to 13%, then to 15% which is the percentage the government wanted all the long. But of course, they will not raise the tax on tobacco since studies have shown that raising the price of cigarettes only discourages people from starting to smoke....

4 ( +4 / -0 )

"The practice of taxing food"... I could not agree more. Every week, when shopping for food I buy items on sale at 20% or 30% discount, such as stale bread or milk at/near the best-before date. After examining my receipt, I would always note the sales tax sum that I had paid was greater than the discounted savings...

1 ( +1 / -0 )

iF the Japanese disagree, why are they not protesting ??? in the streets and all over the country ???. maybe, they are just complainers with lots of money.

0 ( +0 / -0 )

VAT is 27% in Hungary, 25% in the Nordic countries, 20% in Britain and a number of other European countries. Five US states have sales tax rates over 9%. California has a 8.56 rate (some cities are higher) and a state income tax. Australia has a 10% VAT rate with some exceptions.

EU regulations do not allow listing the ex-VAT price so you are not constantly reminded how large the ripoff is.

People who think Japan has high tax rates have led a very sheltered life.

My disposable income in the UK would go up substantially if the VAT rate was only 10%.

-2 ( +0 / -2 )

Hang on, hang on... "nearly half" will be used to the sole purpose the government has been stating as to the need for the increase? What will the majority, then, be used for? More fighter jets so Abe can appease Trump? We all know we're going to hear about a "record military budget" being agreed upon before the end of the year.

And I love how in 2014, when the tax was raised to 8%, train companies and vending machine companies said they had no choice but to raise it to 10% then because the machines can't take one or 5 yen coins, and that by doing so they would not raise it again when the tax went up to 10%, but now they are, sure enough, raising it again. I guess it says a lot about the short-term memory a lot of people have here and that companies exploit. I feel sorry for the people who have to buy and program new cash registers for this ludicrousness.

2 ( +2 / -0 )

Nearly half of the 5.7 trillion yen ($52.8 billion) additional annual revenue expected from the tax hike will be used to improve welfare programs, centering on free preschool education ...

Japan continues to issue deficit-covering bonds to pay for swelling welfare costs, including public pensions and medical care, ...

New spending on free preschool instead of paying down the enormous pension and medical care debt?

1 ( +1 / -0 )

Reminds me of UK VAT. Started off at 10%, now nestling in at a cosy 20% and no doubt will go higher in the future.

-1 ( +0 / -1 )

@disillusioned

Do we live in the same world?

Companies not making money increase prices to get even less customers buying their products?

Yes, that one sounds ridiculous.

You buy something you think is worth a certain price.

1 ( +1 / -0 )

"AT is 27% in Hungary, 25% in the Nordic countries, 20% in Britain and a number of other European countries. Five US states have sales tax rates over 9%. California has a 8.56 rate (some cities are higher) and a state income tax. Australia has a 10% VAT rate with some exceptions."People who think Japan has high tax rates have led a very sheltered life."

I would trade the retail cost of food (after tariff effects and sales tax) of the other countries instead of what we have here. Well I guess cigarettes are super cheap here at least but I don't want to smoke.

-2 ( +0 / -2 )

Every week, when shopping for food I buy items on sale at 20% or 30% discount, such as stale bread or milk at/near the best-before date. After examining my receipt, I would always note the sales tax sum that I had paid was greater than the discounted savings...

I'm not a mathematician. But, how is a 10% tax greater than a 20-30% discount?

1 ( +1 / -0 )

50 years of successive governments doing near nothing to correct plummeting birthrates & an a woefully unbalanced labour market are coming home to roost, by the boomers & aged enslaving younger generations with absurd financial burdens they have no hope of paying.

Furthermore, they will brazenly flog foreigners with another thinly-veiled tax gouging chance like nenkin as mentioned by others, & resist ever providing it to those that stay & keep most of it for those that leave.

Expect at least another two x 2% increases in the next decade or so, & also expect a severe price spike in domestic produce as the old farmers age out of farming, with no-one left to replace them.

Birthrate adjustment? Epic FAIL

Food security? 73% in 1970 & around 25% now. Soon to be 10%? Epic FAIL!

Radical policy change to address huge structural & policy problems? I like Abe, but many others seem to do little more than keep the seat warm while Japan slides into oblivion... perhaps we should let a few foreigners in (that we can control) for a limited time on slave visas so that they can do the dirty work we are too precious to do - things like food production & caring for the old buggers that allowed these perfectly preventable, slow moving, & highly visible national disasters from occuring in the first place!

I do love Japan, but decades of government have failed in the most fundamental ways on THE most critical issues!!!

2 ( +2 / -0 )

@Henny Penny... at least you have a shelter, for some this tax rate increase could lead to theirs being taken away. In other Countries VAT (Value Added Tax) is not applied to basics , yet in Japan it is. Albeit food remains taxed at 8%, services, etc (e.g. housing rent) will be tax at 10%. Also... should you wish to purchase a place to live in, you now need to pay 10%.... VAT in other reasonable countries doesnt apply to such large purchases... so the net result, will be people either renting longer, mortgages being extended longer, or your kids staying at home longer....

0 ( +0 / -0 )

The Military spend is being driven by the Japanese Right wing... no wonder other Countries are a bit concerned. If you were a defensive nation, why would you need Stealth fighters/bombers ?

Well... now that North Korea can drive a sub into Tokyo Bay and launch a missile at us, I guess those new Fighters are somewhat redundant (assuming the local Air force can fly them).

As Foreigners we have no Say in Japanese Political matters - regardless whether we are considered "Permanent" residents or not.

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