Japan’s consumption tax increases

Don’t eat or take-out? Pay by credit card or cash? As October 1 passed zero, Japan’s consumption tax, which had been postponed twice before, was raised as scheduled in the controversy, from 8% to 10%.
This is the third time that Japan has raised its consumption tax since 1997. The first two increases were from 3% to 5% in April 1997 and from 5% to 8% in April 2014, respectively.
However, in order to learn from the lessons of the impact of the previous two consumption tax increases on Japan’s economy, the Abe government has introduced a series of supplementary measures since the beginning of this year, hoping that consumption tax will develop stable financial resources for the existing social security system, while minimizing its negative impact.
So, how much impact will the increase in consumption tax have on tourists going to Japan? How much has changed Japan’s economy?
Has little impact on tourists?
Consumption tax is a kind of tax levied by the Japanese government in April 1989. It belongs to value-added tax and covers almost all goods and services transactions. Whether Japanese nationals or foreign tourists visiting Japan, as long as they consume in Japan, they need to pay consumption tax.
Japan has always been a popular destination for overseas tourists. Although the consumption tax is raised by 2 percentage points, it is bound to raise the tourist’s cost in view of all aspects of clothing, food and housing.
Shopping, for foreign tourists, may be the most insignificant aspect of the consumption tax increase and its impact on tourists. Since May 1, 2016, the Japanese Tourist Office has reduced the tax exemption for consumables and general commodities to 5,000 yen (about 330 yuan), so long as foreign tourists purchase the specified quota, they can enjoy the tax exemption preference. Therefore, a Japanese purchasing agency told the first financial reporter that as long as the amount of tax-free purchase is available, generally speaking, the purchase of tourists is not affected by the increase of consumption tax.
In terms of catering, accommodation and travel, it will obviously be affected by the increase of consumption tax. Of course, if visitors only spend one night or eat a meal in Japan, the impact may not be obvious. However, the premise of this conclusion is that the merchants did not raise the price. Unfortunately, since the beginning of the year, prices of dairy products, beverages and daily necessities have been quietly rising before the increase of consumption tax.
At present, prices have already increased, including canned fish (7%~10%), processed fish products (5%~15%), ice cream (6%~12%), instant noodles (or 3%~8%). For example, Meiji, Senyong and other ice cream products have increased their prices by 8 to 10 yen. In addition, Meiji has raised the prices of 111 dairy products, such as milk and yogurt, since April 1. Since April 2015, the price of Japanese dairy products has risen sharply again after four years. In April, the company announced that it would raise the price of its bottled drinks. The company raised its product price back to 25 years ago.
In the cafeteria restaurant, 10% of the consumption tax will be charged according to the “Hall Food” standard, and the package will still be 8%.
Although Japan’s consumer goods such as food, non-alcoholic beverages and newspapers remain at the 8% consumption tax rate in the rules for the increase of consumption tax, there will be a difference between the tax rates of “canteen” and “takeout”, with the former going up to 10% and the latter staying at 8%. For example, eating in a restaurant in a theme park such as the park and the Universal Studios is subject to a 10% consumption tax according to the standard of “Hall Food”, while the consumption tax is still 8% when packaged. This is true of restaurants that eat their homes, McDonald’s and other fast food restaurants.
According to the data released by Japan’s tourism and Tourism Bureau, Chinese tourists visited Japan in 2018, breaking 9 million people, spending 1 trillion and 500 billion yen in Japan, equivalent to 95 billion 600 million yuan, becoming the highest foreign tourists in Japan. However, the Japanese tourist office now believes that after the relaxation of visa measures, it is more convenient for Chinese tourists to return to Japan, and the amount of single consumption will not necessarily remain high. Therefore, the Japanese tourist and tourism department is committed to strengthening the tourist experience of Chinese tourists and displaying more customs with Japanese characteristics.
Complain a lot
However, for the Japanese people, this round of consumption tax increases will undoubtedly raise the cost of living. According to Japanese media reports, before the consumption tax was raised in October 1st, a number of famous shopping malls and department stores in Japan appeared to sweep goods and store goods. Gold jewelry, Shinkansen tickets and other commodities were popular. In line with the increase in consumption tax, many Japanese airlines and railways have announced plans to raise fares.
On September 30, the latest figures from Japan’s Ministry of Economy, Industry and Industry showed that domestic demand was strong in August, with retail sales rising 2% year-on-year, 0.9% higher than previously expected, reflecting the Japanese people’s buying enthusiasm before the consumption tax hike.
Of course, while raising the consumption tax, the Abe government is also implementing measures such as free early childhood education, non-cash settlement of the “points return point”, automobile tax reduction and so on, to help the people get through this stage smoothly.
For example, the point return system of non-cash settlement means that Japanese people can get 5% of the return point of purchase in small and medium-sized stores and 2% in large chain franchise stores by swiping their cards. The system is limited to June 2020, with about 500,000 stores participating in this consumer incentive measure. For low-income people and child-care families, the limit of “excess commodity vouchers” is up to March 2020, with a maximum of 20,000 yen per person to buy commodity vouchers worth 25,000 yen. In addition, as long as they are enrolled in government-established kindergartens, Japanese families can also enjoy the benefits of free early childhood education.
However, this round