politics

Abe likely to decide on next sales tax hike around December

41 Comments

Prime Minister Shinzo Abe will most likely make a decision on whether to raise the sales tax a second time, from the current 8% to 10%, in December, economic and fiscal policy minister Akira Amari said on Sunday.

The April 1 rise from 5% to 8% was the first increase in 17 years and the first step in a two-stage boost that is set to take the levy to 10% in October 2015 as part an effort to curb the nation's massive public debt.

It was Abe's predecessor, Prime Minister Yoshihiko Noda, who forced legislation through the Diet in 2012 to hike the sales tax in two stages.

Amari said that Abe will take into account the economic impact of last Tuesday's tax hike as well as Japan's economic performance during the summer and early autumn before deciding on whether to go ahead with the next hike.

On Saturday, Abe went shopping at Nihombashi Mitsukoshi department store in Tokyo and spent about 40,000 yen. Abe told reporters he wanted to see firsthand how the sales tax hike was affecting consumer spending.

Economists say Abe, 59, has a good chance of surviving the rise in the tax, seen as vital if Japan is to start getting a grip on its public debt and fund the bulging social security costs of the world's fastest-aging population.

That's because the economy is in better shape now after 15 months of his "Abenomics" recipe of hyper-easy monetary policy, fiscal spending and promised reforms.

The Bank of Japan has kept monetary policy unchanged since its intense burst of stimulus a year ago, when it launched an aggressive asset buying program to push consumer inflation to 2% in two years, a tough target for an economy plagued by deflation for the past 15 years.

Japan's economy posted the strongest growth among industrial powers in the first half of 2013, spurred by Abe's reflationary policies, but has slowed to less than a 1% annual rate since then. Policymakers and private-sector analysts expect the economy to dip in the April-June quarter before rebounding in July-September.

© Japan Today/Reuters

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41 Comments
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I want to see those stuffs which he bought for 40,000 (Just curious did he buy Japanese products or not?)

7 ( +7 / -0 )

He bought six books, a pair of shoes and some food products including yogurt and curry.

0 ( +0 / -0 )

Just rip off the bandage already. Peeling it off slowly by taking it to 8% before the final 10% is just annoying and makes for a pain with trying to estimate post tax prices (especially since supermarkets only show the pretax prices now). That 2% is not going to send people into poverty, i would rather have it hit now.

8 ( +9 / -1 )

On Saturday, Abe went shopping at Nihombashi Mitsukoshi department store in Tokyo and spent about 40,000 yen

for a guy with his salary, he couldve done at least 10 fold to really prove a point. stingy.

The tax raise was a stupid idea. Instead of making us pay more (for what was suppose to be money that should've gone to Tohoku, which is not where it will go to). They should've instead cut costs in a variety of places in the government. OR tax tobacco. but no.....

13 ( +13 / -0 )

Abe told reporters he wanted to see firsthand how the sales tax hike was affecting consumer spending.

Excuse me Abe-san, but it is very unlikely that someone with a monthly income of 2,5 million yen would "see" the impact of the increase of sales tax on consumers... You should probably ask some 20man salarymen about it..

14 ( +15 / -1 )

It is an inevitable economic reality regardless of what one thinks of Abe. Japan just doesn't have the money not to implement it due to its public debt. And as the article says it was Noda who got the legislation rolling on it.

1 ( +2 / -1 )

I'll say it again. Less wasteful spending first, tax-increase second. Abe has dozens of police deployed around his neighborhood every day and frequently has roads closed in and out when he's on the move. Utter waste of taxpayer's money.

10 ( +10 / -0 )

ok, after Abe decides further consumption tax hike, it will be BOJ's trun to increase inflation target to 4% :(

3 ( +3 / -0 )

Oh NO!

Someone please tell me Abe's not going to be around this December!

How much longer do we have to put up with this guy?

12 ( +15 / -3 )

Hey, here's an idea, make friends with other countries and stop spending so much money on weapons and defense. Problem solved. There will be no more major wars in the future but TPTB still have us believing it. Biggest scam of all time.

4 ( +7 / -3 )

7 days into a tax hike he is talking about the next one.

10 ( +12 / -2 )

The 10% increase is already done from a consumer point of view anyway. Noticed how many shops are now using 105円, 1050円,... price tags except it is now tax excluded, instead of included as it was before ? You end paying something like 1134円 tax included, while it should have been 1080円 tax included. And overall, allowing shops to display only the tax excluded price is a pain.

10 ( +10 / -0 )

Spending 40.000 Yen for a one time, one store shopping? This man got it made! So probably he will spend 40.800 Yen the next time? But only if my mathematics are right and he still is the PM!

6 ( +6 / -0 )

Why does he have to decide so early? A lot can happen economy wise between December '14 and October 2015.

3 ( +4 / -1 )

this recent tax hike is proving to be more than 3 percent. at each stage of purchasing, there is a 3 percent increase. so by the time it reaches consumers, it's more like a 9 percent hike. i've really felt it at my local veggie store, butchers and supermarket.

6 ( +8 / -2 )

Anyone notice how the shops have been getting slipperier with their labeling of tax-inclusive and tax-exclusive prices?

12 ( +12 / -0 )

@rickyvee: A good example is the vending-machines. They went up from 150 to 160 yen. Because they can't handle a 3% increase.

3 ( +3 / -0 )

Has been explained for weeks on the news.

Vending machines can't handle 1 and 5 Yen Coins, for them to do so would require an internal hardware upgrade per machine.

-4 ( +2 / -6 )

"It was Abe’s predecessor, Prime Minister Yoshihiko Noda, who forced legislation through the Diet in 2012 to hike the sales tax in two stages."

Be that as it may, it is Abe who decided to act on it. Bottom line. He can't fob it off on predecessors. What he could have done instead was say it was Noda who pushed it through, and he who refused and instead cut bailouts to power companies, stopped unnecessary public works projects, cut the size in government, and other wasteful spending -- but alas.

8 ( +10 / -2 )

he wanted to see firsthand how the sales tax hike was affecting consumer spending.

Spending 40,000yen of taxpayers money enabled him to see how it's affecting other people did it??

I hope it does go to 10% though, and we won't have so many bloody 2 yens in change.

1 ( +4 / -3 )

See, here's the thing: if his tax hike proves not too detrimental to his popularity and the economy he can hike it again and blame Noda and the DPJ while at the same time taking credit for what 'Abenomics' has done. If it does indeed hurt and the economy tanks, as it did the last time there was an increase, he can say he is against increasing it another 2% (for the time being) and look like a bit like a hero, claiming as well he is against Noda's legislation and is taking a stand.

As for 'trying to relate to the people'? please!

In any case, it's not like he's made a decision -- he's thinking about deciding to make a decision, as any good Japanese politician does.

5 ( +6 / -1 )

Glad to see Starbucks yesterday still had the old prices displayed.

What they were actually charging, though, soon wiped the smile off my face.

AND, the second cup of (filter) coffee, which was 100yen in March, is now 108yen. 3% my hat!

6 ( +6 / -0 )

I hope that if he does push it up to 10% he raises the minimum wage by at least double that percentage first.

People wont survive on air.

3 ( +5 / -2 )

Just a fake pretense to show LDP "cares" about the tax increase impact on the consumers....as if. The hike to 10% is a forgone conclusion.

Instead of increasing the tax , should have cut wasteful govt. spending that is rampant again, trim the bloated bureaucracy and hike the minimum wage to encourage more consumer spending. But of course that would mean more for the little Taro and less for the fat cats , so no chance of that

5 ( +6 / -1 )

Yeahhh! More taxes....

It's funny how they wanted to get rid of Noda because he wanted to raise the taxes. They got rid of him and boom! "We (LPD) are still raising the taxes."

3 ( +3 / -0 )

Time for a Japanese Spring. People revolt is the fastest way to get rid of Schizo Abe.

0 ( +0 / -0 )

Whether you call Sales Tax or Valued Added Tax, it is just another way of politicians adding injury to the poor, underprivileged and working class. It just exempts the rich and privileged from owning a fair share of the tax burden. That is, a proportional burden. Income tax is the best way, though not perfect, to address fair taxation.

4 ( +4 / -0 )

Sales tax is pretty egalitarian. The rish do pay proportionatley more. At least on personal expenditure. There are way too mnay tax loopholes for the rich to pay their fair share of the tax burden. I do wish they would remove sales tax from basic staples though.

-1 ( +1 / -2 )

JapAnese are now too old to complain. Easy money for gov. Why not do it ?

Then, stores have tag lyers since you dont know if tax inc or excl. my bottle of soda increased from 159 to 172, and that price had not change from 2013 on at least. I ll buy less... Not bad for me, but store will regret it. Lol

1 ( +2 / -1 )

Japanese politicians should take a pay cut before they hike the tax anymore. I know that it will not fix things, but since they are the ones who have mismanaged our hard earned yen, they should at least act like they are taking some kind of responsibility for this mismanagement. It would do a lot of good emotionally for the common man to know that the rich politicians are also going to take a hit, just like us. They messed up. They should take responsibility just like we all have to. They are all rich and have the system working for THEM. Not us. Take the hit before you make the common man suffer anymore or punish him for your mismanagement.

3 ( +4 / -1 )

Abe went shopping at Nihombashi Mitsukoshi department store in Tokyo and spent about 40,000 yen. Abe told reporters he wanted to see firsthand how the sales tax hike was affecting consumer spending.

Another one of those 'Let them eat cake' moments courtesy of yet another hereditary politician born with a silver spoon in his mouth.

1 ( +2 / -1 )

I wonder what books he bought and whether he will actually read them.

1 ( +1 / -0 )

I want to facepalm @ some of these comments.

@avigator So you believe someone earning 10k a year deserves little to no tax while someone earning 10mm deserves 50% tax? Obviously take from the rich is much better than equality.

@afanofjapan The reason why he raises it in steps is to prevent and huge shocks.

Look guys, we all hate on the rich, but the majority got there through hard work, perseverance, and excellent management of their money. How many of us have gone out and splurged on something we didn't need? I guarantee you these people all scoured their finances and micromanaged their earnings. To blame them for everything wrong with the world and touting higher taxation is wrong when you see people on minimum wage spending their income on manga and games.

-4 ( +1 / -5 )

ryuusei Apr. 08, 2014 - 01:39AM JST So you believe someone earning 10k a year deserves little to no tax while someone earning 10mm deserves 50% tax? Obviously take from the rich is much better than equality.

The answer lies in switching the tax base before we raise the tax rates. Any tax consists of a base, or what is being taxed, times a rate. The income tax's base is "income," which comes from labor or wealth. Income from labor is hard to hide and easy to tax, as the middle class knows full well. Income from wealth is easy to hide and hard to tax and perfectly legally. A non-dividend-paying stock, or land, artwork, sports franchises, does not have to show any taxable income. People who own such things can be very rich and live very well. If we simply raised tax rates, the super-rich would just as simply stop showing income or selling assets.

1 ( +1 / -0 )

Abe is basically saying to the people of Japan is, " prepare to bend over some more."

5 ( +5 / -0 )

ryuusei, Australia brought in a 10% GST in one step. I remember it being annoying, but not as annoying as this intermediate tax percentage that is putting prices all over the place. Thank goodness for Don Quixote and their one-yen change box or i would have hundreds of them aluminium coins by the end of the week.

But i agree on some of the other points - a lot of places have pretty much taken their own liberty on increasing prices; either making the tax-inc price suddenly become the new ex-tax price (resulting in an 8% increase); or like my local chinese restaurant, who did that 8% increase on half of their items, but then also increased the price of their teishokus (the other half) from 580yen to 750!

But, i come from a country where yearly inflation is as high as this tax hike, so increasing prices are nothing new.

1 ( +1 / -0 )

I would like Mr. Abe to visit the Aeon supermarket I was just at, having their weekly Tuesday sale, and see how many people are shopping trying to get even a few yen discount. The majority of people cannot afford another tax increase as they are already having trouble with inflation, dormant wages and now this new tax increase!

7 ( +7 / -0 )

Why does ONE GUY get all the power in Japan? I'm still trying to understand this. PM = God of Japan. No other checks or balances. Somehow, this does not seem right, especially as so very few people vote.

2 ( +2 / -0 )

@afanofjapan

from 580yen --> 750yen? Wow over 29% up in that case. Hopefully the demand for those drops by an even larger %.

1 ( +1 / -0 )

@bruinfan Yes, well they lost two customers (myself and my wife); the food was never great, but for 580yen it was a bargain. At 750 yen there are other Chinese restaurants for me to go to.

2 ( +2 / -0 )

Tax hike to 10% in such a short period of time is absurd. If government needs to raise money, they should seriously consider immigration reform. If more people are paying into the system, isn't it the same as raising taxes?

0 ( +1 / -1 )

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