Japan hikes consumption tax to 8%

The increase in Japan’s consumption tax from 5 to 8 percent took place Apr. 1 is the first increase in the tax in 17 years.

The tax hike affects everything that businesses and people sell or by including daily necessities, transport and utility charges. Although many businesses experienced a boom in sales during the days leading to the hike with people rushing to buy everything ahead of the increase, many businesses fear that it would lead to a drop in personal consumption, which would put a damper on the national economy that only recently has shown signs of waking up from the decades-old deflation.

The government has wowed to take steps to minimize the negative effects of the tax hike through economic stimulus steps, but many fear that those steps would only help businesses and bank leaving much of the burden to ordinary people to bear.

In Okinawa, the sentiment seems to be much of the same. Okinawa has recently seen a boom in construction and tourism related project thanks to extra money that Tokyo has been pouring into the prefecture mainly in order to soften people’s opposition to the construction of a new base in Henoko.

Back in 1997, when the consumption tax was raised last time, then from three to five percent, the economy tanked almost overnight, although there were other factors for the downturn.

However, there’s more to come. Prime Minister Shinzo Abe has said that he will decide by the end of the year whether to increase the tax further to 10 percent as planned in Oct. 2015. He says he would make the decision after assessing the economic conditions and effects of this tax hike.

Also, some stores report problems with the tax hike. Some supermarket chains in have reported that they had to delay opening for business on Apr. 1 because of glitches in their computer systems pricessing the purchases.

Another problem has been that rather than showing the total cost of the merchandise after tax, they tally the items without tax and then add the tax at the end causing confusion especially among elder shoppers.