Why are the Japanese so anti raising VAT?

It’s five percent for goodness sakes! Would it really hurt a country with a government in so much debt to put it up to 7.5 or 10?? It’s between 17.5 and 20 in most of Europe. And where was all that fuss when they more than doubled local taxes??

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9 Comments

  1. ejh said,

    September 17, 2010 at 6:43 am

    Only after the government stops wasting our tax money on useless public works projects, US military bases, etc., will these politicians have any business asking us to pay more.

  2. alexcase said,

    October 18, 2010 at 7:40 am

    This sounds like at least a partial answer:

    “… when the bubble popped, Japan first ignored the problems as they developed and then in 1997 actually did everything possible to make them worse. That was the year when Prime Minister Ryutaro Hashimoto raised the national sales tax from 3 to 5 percent, even though the economy was still struggling to recover from recession. The result, of course, was a dip in consumer spending- and a further dive in Japan’s economy” Thunder from the East page 87

    Of course, the real reason the Japanese should be anti-VAT as a tax is that it hits the poorest hardest, but I’ve never personally heard that mentioned

  3. FarSide said,

    April 8, 2012 at 4:37 am

    I was told that the 5% is taken from every sale and that there were too many middle men in distribution networks, meaning that the 5% was more like 15 or 20% in actuality.

  4. crella said,

    April 9, 2012 at 12:01 am

    I think because they tax foodstuffs too, I’m sure the VAT isn’t charged on things like tomatoes, eggs, etc. Food is already pretty expensive here as you know, another 5% is going to be a lot when people are having their salaries and bonuses cut.

  5. alexcase said,

    April 9, 2012 at 7:52 pm

    FarSide
    I’d be very surprised if that is true, because it is a consumption tax and therefore if it’s anything like the UK if you buy something to resell, or for trade purposes generally, you don’t have to pay VAT or can reclaim it. If that wasn’t the case, surely the middlemen would have been cut out by now and factory outlets would be everywhere.

    crella
    If that’s the problem, why don’t they just have different rates for different kinds of goods like most countries?

    • Harry said,

      April 10, 2012 at 2:29 am

      I think I heard wrong. (From http://www.japanconsult.com/japan-company-guidebook-faq/taxes-in-japan-for-corporations/)

      “” The consumption tax is similar to European VAT. The current rate is 5%.
      A tax of 5% is paid on most of the purchase made by the company and that be claimed to the tax office. It is often registered in accounting in an account called prepaid consumption tax.
      On the other hand, the company collects 5% consumption on all domestic sales. The amount received is registered in accounting in an account called received consumption tax.””

      but

      “”Once a year the company has to pay the difference between consumption tax received and consumption tax paid. If the company has a lot of sales abroad on which consumption tax is not received, then it can be in a situation to claim a tax refund for all the prepaid consumption tax.””

      so it’s calculated on every domestic transaction but they only pay 5% on the added value, as makes sense.

  6. crella said,

    April 10, 2012 at 12:02 am

    Well I think that’s what they should do, but they don’t seem to be thinking any farther than ‘raise it’ . It’s very frustrating.

    As for items for resale, there is one odd example of how weird this system is….clinics and hospitals pay the 5% on drugs when they buy them but are not allowed by law to collect that tax from patients when they prescribe the drugs. It adds an extra 5% expense to running a clinic. It’s crazy.

  7. alexcase said,

    April 10, 2012 at 3:34 am

    It does seem to disprove the famed Japanese skill at compromising. Also – if some thing it should be 10% and others think it should be 5%, how about 7.5% (a fairly common rate internationally).

  8. crella said,

    April 10, 2012 at 10:51 am

    Another factor in the protest that I had forgotten is that it was 3% and they raised to 5% with the promise it would go back to 3% in the future….we all feel lied to, so everybody is digging in.


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