May 08 (Japan Times) - The number of small and midsize businesses registered for a cashless payment program, introduced by the government to reduce the negative effects of a hike in the consumption tax last October, topped 1 million in mid-February.
The nine-month program set to run through June appears to have been widely accepted in society, with the number of businesses registered doubling, from around 500,000 at the time of the tax increase, within four and a half months, an official at the Ministry of Economy, Trade and Industry said.
Along with the tax rate increase, from 8 percent to 10 percent, the government introduced the program to refund up to 5 percent of payments for goods and services purchased from small and midsize businesses, such as retailers and restaurants, if the purchases were made using cashless payment methods such as credit cards and QR codes on smartphones.
The refund is made in the form of points that are accumulated and used later for other purchases. The program was aimed at preventing a drop in consumer spending following the tax hike and stimulating consumption to raise the share of cashless payments in Japan, which is lower than other Asian countries such as China and South Korea.
The government has set aside a total of ¥700 billion to promote the program in its budgets for fiscal 2019 and 2020. There were 1.04 million registered businesses across Japan as of March 1.
With the program applicable to an estimated two million firms, the ministry official said it had "made a certain advance" in terms of promoting cashless payments.
But the refund system and other measures taken by the government to stimulate consumption cannot fully compensate for the negative impact of the tax increase.
Japan’s economy, as measured by gross domestic product, shrank an annualized 7.1 percent in price-adjusted real terms in the October-December period from the previous quarter, due to a sharp fall in personal consumption, among other factors, according to revised government data.
