politics

Aso says Japan needs to raise sales tax next year

90 Comments
By Kaori Kaneko and Yuko Yoshikawa

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I remember when it went from 0 to 3% and everyone had a hissy fit, and then when it went from 3% to 5% and you would have thought the world was ending. I was trying to explain the need for such taxes without sounding like I was supporting the governments money wasting ways, but to someone who had never had to pay such a tax, they just felt like they were being taken advantage of...... When it comes to sales taxes there is no way around it, every one must pay their fair share.

-14 ( +8 / -21 )

So the corrupt LDP can waste even more money on useless construction projects, like a bridge to nowhere... yes, of course. The Japanese consumers already pay one of the highest taxes in the world, for example if you pay for the same kinds of every day products in a country in Europe and Japan, then you will be paying exactly about twice as much in Japan.

5 ( +11 / -6 )

Here we go.

It's started!

0 ( +6 / -6 )

Only speaking for myself, if the sales tax goes up to 8% from 5% that difference will be money I will not be able to spend on other items, and I will inevitably have to cut spending even in a small way. There is just no way around it.

7 ( +10 / -3 )

Thats the stuff Aso. Guard the economical change like a hawk and dont hesitate to implement structural reforms that may be politically difficult at first glance. I think most tax payers know that these steps are necessary to get the economy going, but of course they will still feel a bit angry for the extra costs in daily life.

-2 ( +5 / -7 )

seems govt is not happy with easing deflation and wants to further depress consumer confidence. Go ahead since eligible voters have agreed to it :)

3 ( +5 / -2 )

At Bertie..you're right on about that!

-2 ( +2 / -4 )

I say Aso should have his income cut down to the average Japanese worker's salary and then we'll see what he says about the consumption tax being raised to 8%.

Cut spending already. Sheesh!

9 ( +12 / -3 )

Here we go....up goes the sales tax hitting the average Taro the most at the same time as LDP is proposing to cut corporate taxes for their business buddies. Since the govt. trumpets the increasing confidence and conditions amongst the big companies how about letting the big boys do their fair share in rebuiding Japan,s "tattered finances". . On the one hand LDP says it is trying to increase total tax revenue by hiking the sales tax but on the other they will hand it back to the business cronies via corporate tax cut....yeah, that sounds real balanced and fair. Well, I,m sure the Aso family group of companies will come out of this juust fine.

7 ( +10 / -3 )

See ... during the just-concluded election campaign Abe and his LDP buddies said they would study the tax increase situation and make a decision later on when to carry out the increase. This left voters with the feeling that such an increase might be delayed.

Now a few days after the voting, Aso comes out and says no ifs or buts ... it's gotta go up no matter what. So this is the first crack in their vague election stuff.

Get ready to pay that extra 3% tax beginning next April. Nothing we'uns can do about it anyway ...

Remember: Abe & the LDP & and New Komeito are now fully in charge. Ain't nobody gonna stop them for the next three years ... and possibly longer.

4 ( +7 / -3 )

lol @ nobody questioning how the debt got so large in the first place...

If you need to pay back debt, then what you should NOT do is raise taxes. You would actually need to invigorate the economy, not depress it. THEN you can actually pay back in full amount. It's like austerity... it just doesn't work. In fact it seems ridiculous. Why would choking the economy help you pay back the debt? lol...

I think that this is ridiculous, as almost everything in Japan is already very expensive compared to the rest of the world.

3 ( +8 / -5 )

Aa! Sou?

0 ( +1 / -1 )

Tax the rich not the poor!

2 ( +7 / -5 )

So guessing most of you have not done the maths, 3% of your monthly spend would be how much?

3% is not alot and if you are living that close to the bread line then it would be time to rethink your way of life.

Taxes in Japan are not as high as some of the countries you lot have come from but maybe it's just human nature to whinge n moan.

-18 ( +4 / -21 )

The snowball begins! Increasing sales tax will push the price up of every commodity and will drive the economy even further down the pooper. The thing that really gets to me is, his labor reforms include tax breaks for big business and making it easier for companies to fire employees. This will only increase unemployment and create even more financial hardship for Naoki Average. The welfare system in Japan is appalling and cannot sustain any increase in unemployment. They also intend to increase health insurance and pension payments, plus the local governments intend to increase ward taxes. It's a complete shambles and the 50% of people who could be bothered to vote did this to themselves.

8 ( +9 / -1 )

Guarantee you that this will not help the country's finances one bit. They will just have that much more money to waste.

6 ( +8 / -2 )

Abe said that a decision would be made in September sometime after the announcement of where the Olympics would be held in 2020.

This is a balloon being put out by Abe himself through his Vice-PM getting all the whining out of the way prior to actually implementing it.

His approval ratings will begin to fall soon, and then the internal struggles will start, as the LDP leadership also has internal elections scheduled in the next few months as well. The factions are going to be fighting about this one.

2 ( +3 / -1 )

Taxes in Japan are not as high as some of the countries you lot have come from but maybe it's just human nature to whinge n moan.

In reality, the Japanese consumers pay way more than the official 5% tax rate, in some cases they pay twice as much for the same product, or 100% tax rate.

Tell me, just WHAT is cheap in Japan? Almost nothing... really. They're just taxing the poor even more while giving even more exemptions to the rich & corporations. LDP has been infected by neoliberal agenda...

4 ( +9 / -5 )

Even with the increase Japan is blessed with one of the lowest sales tax rates in the world.

0 ( +7 / -7 )

They should tax profits, not consumer shopping. Thieves and fools!

-5 ( +3 / -8 )

So guessing most of you have not done the maths, 3% of your monthly spend would be how much? 3% is not alot and if you are living that close to the bread line then it would be time to rethink your way of life.

StormR, if you think 3% (not just 3%, but a further 3% on top of what is already being taken) is "not a lot", I'll happily take a 3% commission on everything you buy. You can trust me to spend the money wisely. Really, I'll do good things with it and the public will benefit. Honest.

2 ( +6 / -4 )

Quick vote them out! Give them your vote and they hike sales tax.... its unacceptable! Sales tax impact the poor more than that of the rich and there are more poor than rich in Japan as is in any other country. Hike corporate tax to 40%, the government and corporates exchange benefits anyway....

-2 ( +2 / -4 )

raising taxes won't solve the problems Mr Aso. Why don't you take a good look at Detroit.

6 ( +9 / -3 )

Tax hikes are anti-stimulative. So the govt will be implementing both stimulative and anti-stimulative policies. It's like putting a humidifier and dehumifier in the same room and watching them battle it out.

8 ( +10 / -2 )

Taxes go up and spending goes down.

When the sales tax went to 3% the times were not nearly as bad as now or when the taxes went up to 5%.

Now they wan to go to 8% in pretty much a world recession and then continue raising that up to 10%. If Aso was a pilot flying a plane he would be doing the worst thing possible, pulling back on the stick to climb without enough forward speed which in simple terms is called a 'stall'.

Aso, have I spelled it out clear enough what this tax hike will do?

3 ( +6 / -3 )

Largest budget expenditures are(years 2011-2013): 23~24% of the budget is used to pay the cost coming from national debt (interests etc.). 29~ 31% of the budget is used to pay for social security, this will rise as there are more and more older people.

About half (46~49%) of budget revenue comes from government bonds, i.e. debt.

So, the government would have to stop all other services besides social security just to break even. Cutting spending sure sounds great, but even DPJ with its popular 'shiwake' didn't manage to make a dent, you'd have to reduce all expenditures to one third to break even... not going to happen.

Half of the revenue coming from government bods is used to service the current debt... the debt will only grow this way, eventually collapsing.

I have next to no knowledge about economics, but there really seems no way out short of drastically increasing revenue through heavy taxation, unless the economy starts growing at double digit rates.

The question is when to increase the sales tax, not if.

-1 ( +1 / -2 )

Taxes in Japan are not as high as some of the countries you lot have come from but maybe it's just human nature to whinge n moan.

Really? Where did you come up with this little gem of wisdom? By the time you pay your ward taxes, income tax and mandatory pension and health insurance you are up over 35% of your income. And, you can add another 5% for sales tax next year. Not taxed my fanny!

3 ( +7 / -4 )

And here come the promises -- the only ones that will be fulfilled, likely -- to raise the burden on households, just after election time. Could they cut the massive government and wasteful public works? Nah! Just jack up the taxes for the constituents!

1 ( +3 / -2 )

Bad idea!!!!

Ok rais the tax but no tax on food!

3 ( +5 / -2 )

Government should have to sign a pledge to limit infrastructure expenditures to preventive maintenance only for the next 5 years. No more white elephants and bridges to nowhere, or in the case of Okinawa, a crazy-expensive project to cut 5 minutes off the trip from the airport to downtown Naha.

1 ( +2 / -1 )

Who keeps writing taxes in Japan are the lowest in the world? After all the seperate hidden costs in JP, the Taxes are much higher not to mention how everything you buy is so much more expensive than any other Asian countries, the rise in Tax IS not fair. Costs of insurances, (which will also increase with the Tax rate) all make up a huge chunk out of salary. But hey, I understand, someone has to pay for all the huge Bonuses JP give themselves but foreigners dont get, so yes JP needs to increase Taxes, haha

-2 ( +4 / -6 )

Either way they are going to have to raise taxes simply because of the fact that Japan is aging population.

1 ( +2 / -1 )

What is low and what is high taxation? I guess one way too find a reasonable starting point could be to compare with different countries. If the comparison is limited to the sales tax then japan has one of the lowest in the world. Most of EU countries have 4-5 times higher rates. But in the end it comes down to the subjective feeling of the taxpayer. In terms of taxburden on a single worker I think Japan is ranked about average in the industrialized world.

3 ( +5 / -2 )

For God's sake! At least have the common sense to drop the damn tax on food items and rents. Otherwise half the country's pensioners will be doing prison time in order to get three meals a day.

7 ( +8 / -1 )

Sale tax is the most unfair tax as it does apply the same to everybody regardless your income. Japan has already the most expensive price on almost everything so raising the sale tax is going to add a lot of yen on top of everything, it is gonna hurt poor and middle class people, get ready !

4 ( +5 / -1 )

It is all going to go down the drain of funding TEPCO's debacle of attempting to shut down the Fukushima npp.

0 ( +0 / -0 )

Raise the retirement age to 70!!!!!!!!!!!!!!!!!!!!!!

3 ( +5 / -2 )

or some of the whiners could move to LA. California state sales tax (7.5%), city sales tax (9.0%), and California also allows county & district sales tax.

Prices in Japan are high but with an aging population there really is no choice but to raise the sales tax. Like it or not, it's not IF but WHEN... They also need to raise the retirement age!

-1 ( +4 / -5 )

Here goes the tax and spend policies that have ruined other countries. The taxes only hurt the average person but the rich get richer when they tax and those who receive from the taxes will get more. The politicians big businesses get rich with more makeshift work for programs that are not necessary such as building roads to nowhere. The people suffer because they can buy less and then the spending will only be on what is necessary rather the the things that will grow the economy. The fact is he is doing what has been done in many countries and it has not worked but it has kept the same party elected as the people become dependent on government hand outs because there is no work. If you look at the tax it is a 60% increase in sales tax, next it will be an increase in income tax. It will not end. The best thing is to complain to every elected official.

0 ( +2 / -2 )

Why raise the retirement age? These people have worked all their lives while successive governments have pi$$ed away trillions of yen on unnecessary projects to keep their friends and supporters rolling in money. They deserve to enjoy their retirement. Cut beaurocracy, reduce the high salaries of politicians, stop building bridges and roads that are not needed, stop concreting every river bank and mountainside, stop spending money trying to prove Japan is cool, and the list goes on and on and on! The large corporations are getting richer and richer every year. Keep their taxes at a decent level. There IS a choice to raise or not raise the sales tax. Why does the burden always have to fall on the little people?

-3 ( +2 / -5 )

Would like to see food items excluded. Many food prices are already the world's highest here.

1 ( +2 / -1 )

Taxes are a necessity to any government... I think most people can swallow that as long as they know their tax dollars are being used on something beneficial. Unfortunately, a lot of governments around the world do not use their tax revenues for all beneficial things

In Japan's case, the public works building projects.. which is basically a never ending circle of uselessness. They essentially have to build these bridges into perpetuity or the economy will collapse

Servicing the debt... this is insane and will probably never be addressed. The debt will never be paid back, just servicing the interest payments.. Japan can print its own currency so it has a slight advantage in the fact that if they wanted to, they could pay the debt back in full tomorrow, only this will cause super duper hyper-inflation and ruin this country even more.

0 ( +1 / -1 )

Another 'now the election is over' announcement to we the prols.

0 ( +0 / -0 )

Sales tax in japan is relatively low at 5% and a raise of 3% it will still be low compared to UK, or say NZ @15% is what i referred to earlier and if you cannot understand that then it's not my problem.

Don't like working for a living and having a limited income don't blame others, the innovators, movers, shakers and entreprenuers have always been the ones who think outside the box. But I guess we can't all be that way inclined, could never work for some one else and be on a fixed income with no option for expansion.

Come to think of it some of you should think alittle outside the box and come up with ways to expand your own income or continue to be stuck in your dead end jobs making some one elses dream come true LOL.

I could not ride the train every morning or be stuck in a traffic jam for hours either, guess thats why i dont work for some one else and i make my own way in this world.

Just sit there whinge n moan but do nothing about it sheesh guess that why you work where you do.

0 ( +4 / -4 )

Storm, folks in the UK don't pay 30% ON TOP of their health care payments, do they? Japan nickle and dimes everything and likes to claim low taxes all while charging for other things.

-2 ( +2 / -4 )

I'm not happy about the tax hike, but having read all the comments above, I would suggest to a lot of people that if you can't understand the need and hate it so much then please return to your countries. (where taxes are already higher!) just an opinion.

-5 ( +2 / -7 )

We all know the standard arguments against sales taxes: They are regressive, i.e. they affect low income people much more than high income people. So what's the alternative? Progressive taxation on upper income people and corporations? But proposals like those are also problematic for a number of reasons.

Japan doesn't have a tradition of lobbyists and economists like Grover Norquist and Arthur Laffer (he of the famous "Laffer Curve") in the USA who basically equate progressive taxation with theft and/or slavery. Norquist has stated that his objective in life, basically, is to defund the United States government. I'm curious as to why Japanese politicians keep pushing for regressive taxation.

2 ( +2 / -0 )

The national burden ratio (social service cost plus taxes as a percentage of income) of Japan has been low for decades so it's only natural that this new policy of raising to 8% consumption tax (which was agreed by the prior cabinet) which the goal is to lessen the burden on JGB and eventually "match" the said tax revenue with social service costs.

The public works costs is matched and financed by construction bonds which is indicated in this fiscal year's budget (528 trillion yen vs. 5.75 trillion yen). As both LDP/Komeito stated in their manifest, these projects will consist mainly of much needed retrofitting and fixing the heavily depleted roads, tunnels, and bridges (current very important LIFELINES formerly knowns as "roads, tunnels, and bridges to nowhere").

-1 ( +3 / -4 )

StormR: a bit of different maths: 3% less in purchasing power for you is nothing, BUT it means that you will have less to spend to sustain other jobs. Actually 3% means that 30 people with same income sustains one job at same income. In other word and very very roughly unemployment will raise in a similar amplitude. And less income tax revenue, and, and, and... deflation!

0 ( +1 / -1 )

Change that to 5.28 trillon yen.

Storm, folks in the UK don't pay 30% ON TOP of their health care payments, do they? Japan nickle and dimes everything and likes to claim low taxes all while charging for other things.

It simply means 70% of health care payments are from premiums and taxes. We've seen the utter disaster of 100% in other countries to the almost all private health care with people who can't get insured for preexisting conditions so what Japan has is a little of both.

-2 ( +2 / -4 )

Coming from Scandinavia, with 25% VAT/sales tax and 40-60% income tax - bring it on!

1 ( +2 / -1 )

Japan is slowly catching up with other industrialize countries with sales tax 8 - 15 %..

1 ( +2 / -1 )

greenlight: you are right, high tax does not mean the end of the world and if done smoothly it is sustainable in a healthy and social economy. You pay but get direct benefit. In Japan it is totally different, taxes must be increased to sustain export industry (a few % points of the Japan PIB), without any benefit for Joe Tanaka, who will continue to spend 80 hours/week at his desk for less.

0 ( +0 / -0 )

The intention to raise the sales tax is to restart the inflation but it may depress the consumption which the affect would be minimized by the rise in wages through the drop in corporate taxes and higher corporate revenue from exports. However, the concerns are the rise in sales tax has immediate effect on the economy but the drop in corporate taxes has delayed effect so it is possible that the businesses would try to absorb the sales tax because the prices in Japan are already extremely high leading the a drop in corporate income and thus, no raises for the employees. The recent drop of Yen has not helped the exports either, so no higher wages which means the economy would contract. The inflation would seem to appear in the short run but if the corporate revenues are not improved, the economy would sink further. Now, the only thing that can help Japan to raise the corporate income is the China market that is why Abe is trying to get a dialogue going with China.

-1 ( +0 / -1 )

The sales tax is due to rise to 8% from 5% next April, and then increase to 10% in October 2015.

If you want to stimulate domestic sales (spending) this is not the way to do it. The inflation (Abenomics) is already a tax on top of these new sales taxes = inflation should be enough, but with the money worth less they must raise rates.

They are counting on Japanese people (tax slaves) not being able to move away with these new taxes. I am not so sure about that and there are other cities in Asia. =The pension money for retirees may be going overseas because of this.

1 ( +2 / -1 )

You cry babies (nakamushi) out there, go live in the United Arab Emirates, Aruba, Bhutan, Macau, Malaysia, Syria, Tanzania, Bahamas, Gibraltar, Hong Kong, Quata, Saudi Arabia, New Caledonia, British Virgin Islands, or Brunei. Or you can be thankful that you don't live in Hungary, Iceland, Croatia, Norway, Denmark, Romania, Finland, Greece, Poland, Ireland, Slovenia, Uraguay, Latvia, Czech Republic, Belgium, Argentina, Italy, Spain, Netherlands, or Lithuania where the sales tax is over 20%. Since Japan loves to campare itself to S. Korea, the effective personal tax rate in 2012 is 50% in Japan and 38% in S. Korea and the sales tax is 5% and 10% respectively. But low taxes doesn't mean you will be happy. The country that ranks as one of the "world's happiest country" is Denmark with an effective personal tax rate of 55.38% and sale taxes of 25%.

4 ( +6 / -2 )

In Oklahoma the Republican Governor got the income tax for the rich reduced by raising the sales tax. So it is the same in Japan and the rich get richer and poor poorer.

0 ( +1 / -1 )

"3% ( more ) is not a lot"

It is when your net income is less than 300,000 yen a month, and your 2LDK costs more than 100,000 a month not including utilities and bowl of rice with a little unagi on top costs 680 yen at Yoshinoya!

0 ( +0 / -0 )

I think the tax increase is the least evil.

When DPJ wanted to push for its implementation everybody and especially LDP opposed!

Now what we have? The makers have already increased their prices in expectation for demand before the tax hike. We are already hit by stronger yen (import goods) and local monopolies price increases on various fronts.

3% is nothing - I wold rather see the elder who have a lot of savings pay 3% more for everything they buy rather than increasing health insurance and taxes on salaries...

0 ( +1 / -1 )

"3% ( on top of 5%, making it 8% ) is nothing"

It is when your net income is less than 300,000 yen a month, your 2LDK costs more than 100,000 yen a month and a bowl of rice with a little unagi on top costs 680 yen at Yoshinoya or 780 yen at Sukiya!

3 ( +3 / -0 )

Serrano

"3% ( on top of 5%, making it 8% ) is nothing"

It is when your net income is less than 300,000 yen a month, your 2LDK costs more than 100,000 yen a month and a bowl of rice with a little unagi on top costs 680 yen at Yoshinoya or 780 yen at Sukiya!

Time to get a real job then instead of the sleeper job alot choose to do.

Use some initiative and gumption and make your own job. World is full of opportunity if people only cared to look and think.

-5 ( +0 / -5 )

Why do you get all excited about the tax hike?

LDP was very transparent about it before election and a majority of Japanese voted for them again. Good luck.

1 ( +1 / -0 )

StormR Time to get a real job then instead of the sleeper job alot choose to do. Use some initiative and gumption and make your own job. World is full of opportunity if people only cared to look and think. ------------------------------------------------------------------------------------------------------------------------------------------------------

Unfortunately, many skilled workers are out of work in Japan and are forced to take on part time jobs at very low hourly rates for a so called rich country. Try working at yen 800 per hour and see if you can even rent a decent place to live.Oh, I forgot- you have to find the money to pay in to the pension scheme. I didn't say your pension scheme because the government claims it is for others, not yours.

1 ( +3 / -2 )

"Time to get a real job then instead of the sleeper job alot choose to do.

Use some initiative and gumption and make your own job. World is full of opportunity if people only cared to look and think."

Geez, if all the millions of people who do all these "sleeper" jobs suddenly used "some initiative and gumption" and made their own higher paying jobs, we would have hyper inflation, wouldn't we?

-3 ( +0 / -3 )

smithinjapan:

And here come the promises -- the only ones that will be fulfilled, likely -- to raise the burden on households, just after election time. Could they cut the massive government and wasteful public works? Nah! Just jack up the taxes for the constituents!

Careful there, old friend. You're dangerously close to sounding like a Republican. ;-D

-1 ( +1 / -2 )

Ka_Chan But low taxes doesn't mean you will be happy. The country that ranks as one of the "world's happiest country" is Denmark with an effective personal tax rate of 55.38% and sale taxes of 25%.----------------------------------------------

Then we should raise taxes as much as possible so people can be happier? I think you will find that there are a lot more benefit programs and people are cared for more than in Japan. As an example, how about 100% free health care for everyone in Denmark?

1 ( +2 / -1 )

MASSWIPEJul. 24, 2013 - 11:30PM JST

We all know the standard arguments against sales taxes: They are regressive, i.e. they affect low income people much more than high income people. So what's the alternative? Progressive taxation on upper income people and corporations? But proposals like those are also problematic for a number of reasons.

Most Japanese voters do not know a difference between REGRESSIVE tax and PROGRESSIVE tax and how unfair it is to the poor. I would like to see at least Food and Medicine are excluded from sales tax hikes.

1 ( +1 / -0 )

" I would like to see at least Food and Medicine are excluded from sales tax hikes."

What! Food and medicine sales in this country are in the trillions of yen! Another 3% on top of the 5% of all the food and medicine sales would mean enough money to keep Aso looking dapper, plus buy a few fighter planes to scramble whenever Chinese ships enter disputed waters.

-1 ( +0 / -1 )

The people of Japan are paying for the follies in Abe's economic policies. Yen devaluation will bring about imported inflation. As if not enough the sales tax is going to be increased. How about that for kindergarten economics?

1 ( +2 / -1 )

"Most Japanese voters do not know a difference between REGRESSIVE tax and PROGRESSIVE tax and how unfair it is to the poor."

What makes you think that? Have you ever asked Japanese (in their native language) to explain the difference? I bet you most Japanese adults (especially housewives) would do a better job of explaining the difference than your average American.

1 ( +2 / -1 )

A 5% sales tax is ridiculously low. An 8% sales tax is ridiculously low. The OECD average is 15% people, and in order for Japan to start paying it's debt, it's got to start collecting the money.

This is responsible governing. This will be good for Japan.

-5 ( +0 / -5 )

Tamarama

A 5% sales tax is ridiculously low. An 8% sales tax is ridiculously low. The OECD average is 15% people, and in order for Japan to start paying it's debt, it's got to start collecting the money.

It's only high compared to EU countries with ridiculously generous social benefits (in the US it's generally lower than 5%), and even then in most EU countries daily necessities like food are not taxed, while in Japan virtually everything is taxed. So in effect the Japanese consumers pay more, particularly poorer people.

And 5% is the official figure, but in reality Japanese products are taxed at a much, much higher rate, and that is why most things in Japan are ridiculously expensive.

This is responsible governing. This will be good for Japan.

NO, this will bring Japan into recession.

-4 ( +1 / -5 )

TamaramaJul. 27, 2013 - 07:57AM JST

"An 8% sales tax is ridiculously low"

Not when your income is less than 300,000 yen a month and your 2LDK costs over 100,000 yen a month not including utilities and one nice apple costs 150 yen and a bowl of rice with a little unagi on top costs nearly 800 yen at Sukiya.

1 ( +2 / -1 )

Thomas A

It's only high compared to EU countries with ridiculously generous social benefits (in the US it's generally lower than 5%

Why are you using the US as the standard bearer for tax? The US, after all, is a country that is clearly in need of tax reform to help it to start to pay it's mountain of national debt. Just like.....

So in effect the Japanese consumers pay more, particularly poorer people.

No they don't. Everybody pays for what they spend. Wealthy people dining out, or spending money on fast cars, or expensive clothes, pay tax on those things. More than the poorer people, because they aren't purchasing these items.

And 5% is the official figure, but in reality Japanese products are taxed at a much, much higher rate, and that is why most things in Japan are ridiculously expensive.

You will need to qualify this statement. I don't know what you mean.

Not when your income is less than 300,000 yen a month

Right, but once the economy starts moving into inflation, your salary will start moving with it.

-1 ( +1 / -2 )

"once the economy starts moving into inflation, your salary will start moving with it"

Not if I remain with the company I'm working for now.

1 ( +1 / -0 )

Why are you using the US as the standard bearer for tax?

Because you said "OECD countries", duh... You have Europe, US, Japan/Korea... and what, Canada/Australia?

No they don't. Everybody pays for what they spend. Wealthy people dining out, or spending money on fast cars, or expensive clothes, pay tax on those things. More than the poorer people, because they aren't purchasing these items.

Right, what I mean is that they are burdened more, because they have less to spend.

You will need to qualify this statement. I don't know what you mean.

Karel van Wolferen explained how the "real" tax rate in Japan is much higher than official 5% rate, and in reality it's said to be at around 20%, and sometimes as high as 100%. It has to do with how the economy in Japan is run "unofficially" in a very complex way that does not benefit the people at large. He has done a test: He bought the same or similar everyday products from a store in a small town in Japan, and then from a small store in his hometown, Netherlands. He was surprised to find that he paid almost exactly twice as much in Japan than in Netherlands. So the "real" tax rate was essentially 100%.

The point is, everything in Japan is already very expensive. The infrastructure in Japan sucks and Japan doesn't get much social benefits. It doesn't seems like the people in Japan are not getting much in return, no matter how much they are taxed. So where did all the money go?

-3 ( +1 / -4 )

Because you said "OECD countries", duh... You have Europe, US, Japan/Korea... and what, Canada/Australia?

Europe not being a country aside (duh?), any one of those countries have sales tax rates up around 20% (Germany, France) 25% (Sweden), 21% (Spain). Even Australia at 10% is now generally much more expensive than Japan with goods and services.

Karel van Wolferen explained how the "real" tax rate in Japan is much higher than official 5% rate

Are you talking about effective tax rate? Japan ranks around 50th in the world for that, at under 30%.

100%?! Well.....think about what you have written there.

The reason you often hear people say Japan 'owns' it's own debt, is because the government has been borrowing against the vast reserves of cash held in personal bank accounts, bonds etc. But money in bank accounts earning no interest isn't good for the economy, and doesn't help pay debts. The Japanese Government is right to up the amount of this they take at the till.

Serrano's 800 Yen Unagi Rice bowl, already contains about 40Yen of tax. It will go up to about 814 Yen. If it's too much, then it's time to budget for something slightly cheaper.

-1 ( +0 / -1 )

100%?! Well.....think about what you have written there.

Then why the heck do you pay twice as much in Japan than in Netherlands (another country with relatively high tax rate)?

Do the Japanese people feel rich, despite being a relatively rich country? Probably not.

-2 ( +2 / -4 )

SerranoJul. 26, 2013 - 09:03PM JST

" I would like to see at least Food and Medicine are excluded from sales tax hikes."

What! Food and medicine sales in this country are in the trillions of yen! Another 3% on top of the 5% of all the food and medicine sales would mean enough money to keep Aso looking dapper, plus buy a few fighter planes to scramble whenever Chinese ships enter disputed waters.

You will learn a philosophy of economics on this subject (how you slice a pie while you are fair and just) once you enroll to the college. Good luck.

0 ( +0 / -0 )

There are 50 states in USA so tax system differ. US people have to pay US income tax. Each state has different state income tax. I live in Nevada. There is no State Income tax. Sales tax differ by state, too. There is no sales tax in Nevada. So. people often use on-line sales such as Amazon. How state manage budget? Casino tax, mostly. State can not waste money or casino industry will be mean. Many states such as Ky, Tn has Japan Inc factories but we don;tt have/ Someone proposed 1 cent entertainment tax but it was opposed. So, no sales tax yet. You can not compete US tax system with Japan's/

0 ( +1 / -1 )

What's with the thumb downs? Can somebody explain to me why do you pay twice as much in Japan than in Netherlands? (or in most other countries?) No?

-1 ( +2 / -3 )

Abe visited 3 countries that has been improved their Govt. Revenue. Maybe he learned open secret of these three countries so that tax raising is not best solution.

1 ( +1 / -0 )

Thomas AndersonJul. 28, 2013 - 09:09AM JST

What's with the thumb downs? Can somebody explain to me why do you pay twice as much in Japan than in Netherlands? (or in most other countries?) No?

Thomas, It has nothing to do with tax. The issue is that everything in Japan is too expensive relative to disposal income as you have mentioned above.

I blame this disaster to failing fiscal policies and old inefficient economic model focused on business sector, not on consumer sector (PEOPLE) for the past 6 decades. People have been saying "shoganai" and put up with that for years. When everything is too expensive, people have no money left . Again, my US dollar is only worth about 25 cents in Japan, so I do not buy anything in Japan. I can buy the same thing cheaper in USA.

1 ( +2 / -1 )

Thomas, It has nothing to do with tax. The issue is that everything in Japan is too expensive relative to disposal income as you have mentioned above.

So what I'm questioning is, why is it so expensive?

I blame this disaster to failing fiscal policies and old inefficient economic model focused on business sector, not on consumer sector (PEOPLE) for the past 6 decades.

That's what I've been saying, it's the "unofficial" tax rate that makes everything so expensive. Karel van Wolferen has calculated that the actual sales tax rate is around 20%, and sometimes as high as 100%.

-1 ( +2 / -3 )

Thomas, thank you for your quick response. We both agree then. Do me a favor, will you please provide me with something about Karel Van Wolferen ?

Karel van Wolferen has calculated that the actual sales tax rate is around 20%, and sometimes as high as 100%.

1 ( +1 / -0 )

What's with the thumb downs? Can somebody explain to me why do you pay twice as much in Japan than in Netherlands? (or in most other countries?) No?

Prices of things are not twice as much as other places. A Tall Coffee in Japan is around 340 Yen at Starbucks, the same thing where I live is around 500Yen. In the Netherlands, it's about 325 Yen. For most things, Japan is cheaper than where I live. The problem, as Globalwatcher is pointing out, is that salaries have stagnated due to recession and deflation. People earn the same in Japan they did 10 years ago when I first moved there.

Japan needs to get into an inflationary cycle, where, amongst other things, salaries will head north. Japan needs to address it's mountain of debt - and it has to unlock the vast reserves of money people have squirrelled away in dead bank accounts where it does not grow at all. Tax on spending is one of the ways to do this. Printing money, is not.

Let me ask you this: What do you suggest Japan does to address it's debt and deflation?

-1 ( +2 / -3 )

Tamarama

A Tall Coffee in Japan is around 340 Yen at Starbucks, the same thing where I live is around 500Yen. In the Netherlands, it's about 325 Yen.

We're not talking about cups of coffee in Starbucks, because obviously these corporations will adjust the prices accordingly so that they will cost about the same worldwide. Go to a store and buy similar daily necessities and foods and compare them between countries.

The problem, as Globalwatcher is pointing out, is that salaries have stagnated due to recession and deflation.

We're also not talking about how much people earn, we're talking about how much things cost.

Tax on spending is one of the ways to do this. Printing money, is not.

Okay, so you want people to spend even less? That makes no sense.

Let me ask you this: What do you suggest Japan does to address it's debt and deflation?

How did the debt get so large in the first place? Where exactly did the money go? For being a rich nation, Japan certainly does not seem "wealthy". The bureaucrats are telling the politicians to raise taxes so that they can spend them on bribes and special interest groups like the construction mafias so that the money will go to their own pockets. Trillions of yens are being wasted on corruption money.

We have very little clue about how the money is actually spent and managed by the bureaucrats, yet saying that we need to raise taxes is ludicrous. We may need more transparency on how the taxes are being spent.

-2 ( +2 / -4 )

Go to a store and buy similar daily necessities and foods and compare them between countries.

OK, here is a comparison I found for you.

1 Litre milk - Netherlands 0.75 Euro - 100Yen, Japan 168 Yen

6 Eggs - Neds 143 Yen, Japan 168

Bread - Neds (loaf) 260 Yen, Japan (half loaf) 156 Yen

Rice (1kg) - Neds 326 Yen, Japan 478..... Unless you want your Koshi Hikari from Minami Uonoma, which will cost you about 3000 Yen

How's that? Looks like your numbers are way off to me.

We're also not talking about how much people earn, we're talking about how much things cost.

If you can't see the relationship between the two, this conversation is pretty much done.

Okay, so you want people to spend even less? That makes no sense.

Don't try to construct my argument for me, Thomas, it's very unbecoming.

How did the debt get so large in the first place?

Do some research! Tell me what you find.

For being a rich nation, Japan certainly does not seem "wealthy".

You obviously haven't travelled much. Japan is very wealthy indeed.

The bureaucrats are telling the politicians to raise taxes so that they can spend them on bribes and special interest groups like the construction mafias so that the money will go to their own pockets. Trillions of yens are being wasted on corruption money.

Is this just your opinion, or do you have evidence? Your argument has regressed into suggestions of murky corruption and plain hyperbole to explain Japan's financial woes - go and do some reading and find out the real reasons why Japan is in the state it is. You also haven't answered the question I posed to you in my previous post....would you like to? Or are you just content to criticise all efforts to rectify economic problems in Japan?

Taxes are not bad, they are good. Japan must tax more, it's as simple as that. It's a very common sentiment amongst economic analysts.

2 ( +3 / -1 )

How did the debt get so large in the first place? Where exactly did the money go? For being a rich nation, Japan certainly does not seem "wealthy". The bureaucrats are telling the politicians to raise taxes so that they can spend them on bribes and special interest groups like the construction mafias so that the money will go to their own pockets. Trillions of yens are being wasted on corruption money.

Deflationary cycle. People, especially the dankan generation, don't spend-banks carry enormous amount of deposits-very little lending activity since people don't spend-banks in turn buy JGB-The government issues JGB to finance the payout of dankan generation. Back to square one.

It's essentially a net sum zero game on Japan's balance sheet. Speaking of which, since Japan is the largest net creditor nation in the world for 22 years consecutively, Japan is indeed "wealthy" in that regard.

The public works construction projects are derived from separate government bonds which has nothing to do with sales tax increase. What the government here is trying to do is minimize the burden of JGB for payouts of social services. The goal here is to have a system where the sales tax revenue match the social service costs in terms of amount and timing.(short term cash outlay with short term cash in)

-1 ( +3 / -3 )

It is wrong to place a financial burden on the people for what those in govenment wasted money on.

0 ( +0 / -0 )

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