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Japan Consumption Tax hike helps sink economy

  • Feb 18, 2020 | Richard Asquith

Japan’s increase in its Consumption Tax rate from 8% to 10% on 1 October 2019 is set to tip the country into recession.

Quarter 4 growth for 2019 has been reported as negative 6.3%. This compared to expected targets of negative 3.7%. With the effects of the coronavirus outbreak showing signs of hitting Quarter 1 2020 economic performance. This would mean a likely technical recession - defined as two successive quarters of negative growth - for the country.

When Japan raised its Consumption Tax rate from 5% to 8% in 2014, the country fell into recession as shoppers brought forward expenditure. The scheduled rise to 10% had to be postponed twice until 2019 for fears of triggering another recession.

The Japanese government had launched a range of support measures in 2019 to prevent a recession this time around, included shopping vouchers for the poorest. But this now seems to have had little effect.

Latest Japanese news

Japan 8% reduced Consumption Tax rate

January 23, 2019

Japan is scheduled to complete a two-stage doubling of its Consumption Tax rate to 10% on 1 October 2019. The first part of the rise, from 5% to today’s 8% was enacted on 1 April 2014.

Japan confirms 2019 Consumption Tax hike

October 14, 2018

Japan is to confirm this week its plan to complete the second rise in its Consumption Tax, from 8% to 10% in October 2019. ...

Japan on track for 10% Consumption Tax 2019

August 13, 2018

Japan’s latest growth rates mean the planned rise in its Consumption Tax from 8% to 10% in October 2019 will still go ahead. The...

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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