Govt. wants to minimize tax impacts

NHK -- Oct 16

The Japanese government is looking at how to minimize the impact of the tax hike.

That's because consumers shut their wallets when the tax on all consumer goods was raised from 5 percent to 8 percent in April 2014. Annualized GDP shrank 7.1 percent after that.

This time the government is thinking of ways to prevent the economy from cooling down.

One is a system of subsidies to help consumers and smaller retailers. People making cashless payments will get points worth 2 percent of what they pay. They can use the points for future purchases.

There are also plans to prevent a slump in sales of big-ticket items like houses and cars.

Officials are looking at bigger tax breaks for people with mortgages, and expanding benefits for homebuyers whose annual income is below a certain level. They also plan to reduce taxes on car purchases.

The government will introduce a multiple tax rate system that will exempt certain items from the hike. Food, non-alcoholic beverages and some newspapers will still be taxed at 8 percent. The idea is to ease the burden on lower-income people.

Alcohol will be taxed at the new rate. So will restaurant orders -- but not takeouts. That's raising concern among dining establishments ... because some customers who order food to be taken away may actually eat it on the premises.

Government officials expect the tax increase to result in an additional 50 billion dollars in annual revenue. That will be used to help pay off Japan's huge fiscal deficit and for social welfare.