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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.


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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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