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Call to Delay Japan’s Next Sales Tax Increase


 Japan's sales tax rate, sooner or later.

Update 11.19.2014: Prime Minister Abe has officially delayed the October 2015 sales tax increase for 18 months, part of "a new, more aggressive phase of his crusade to boost Japan's economy."

Update 11.12.2014: Prime Minister Abe has said he will postpone the planned October 2015 sales tax increase if the July - September growth figures are "disappointing." Preliminary economic data is expected early next week.

Japan’s sales tax rate was raised from 5% to 8%, last April. A second tax hike to 10%, planned for the fall of 2015, is currently under consideration. Now several prominent voices are calling to delay the next tax increase until April 2017 (Reuters).

Wait

A Japanese official has “expressed concern that raising the national sales tax too soon after a damaging April hike could derail an economic recovery.” Taking a similar stance, the U.S. Treasury Department cautions “not to go too fast on budget-balancing….”

Esturo Honda, one of the principal architects of "Abe’s policies to revive growth and banish inflation" told reporters recently, “There’s a great danger from the next sales tax hike given the current situation where the positive effects of ‘Abenomics’ and the negative impact of April’s sales tax hike are offsetting each other.”

Don’t wait

The Bank of Japan, the Finance Ministry, and several major corporations are encouraging Prime Minister Abe to “raise the tax as planned next year to keep Japan’s promise to reduce the biggest debt burden in the industrial world.”

The prime minister is mindful of the “need for both fiscal reform and continued recovery.” Although the two sales tax increases were on the books before Abe came to power in 2012, the prime minister must “certify that the economy is strong enough to withstand a further hike.”

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photo credit: heanster via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.