After being delayed twice, the Japanese government finally raised the consumption tax. (Image via The Japan Times)

Japan raises the consumption tax to 10%

Alfonsus Adi Putra
Politics & Economic
News Flash Japan
Oct 01, 2019
2016
After being delayed twice, on Tuesday, the Japanese government finally announced its decision to raise the consumption tax from 8% to 10%. This was the first hike for the recent five years.

The hike was a follow up to the first hike in April 2014, where the consumption tax was raised from 5% in 1997 to 8%. It was planned to be a two-stage hike. However, the second stage hike was delayed twice from the scheduled time in October 2015. First, it was delayed to April 2017 then to September 2019.

The tax might be slapped on almost all goods and services from books to cars, except food. On a side note, the Japanese government also regulated that for the transaction with electronic payments at smaller retailers, the Japanese customers get to enjoy a 5% rebate. While for the greater retailers, the customers enjoy only a 2% rebate.

The regulation aims to lead Japanese people to electronic payment, rather than cash. Compared to its neighboring countries, Japan is lagging behind when it comes to cashless payment.

It was estimated that the total of the revenue from the tax hike would be as much as ¥5.7 trillion, and half of it would be used to improve social security programs. One of these programs will be free preschool started in October.

The tax hike was Japan’s effort in battling the falling birthrate and aging population. Its economy might be performing well these recent months. However, the tax hike might affect Japan’s economy amid the rising tension between the United States (U.S) and China. Fortunately, in 2020, Japan is going to be the host for the Summer Olympics. The electronic payment rebate regulation might also help.

Source: https://www.bbc.com/news/business-49849484

Economy , Asia , Japan , Tax , Consumption , Social-Welfare