Selective consumption tax weighed
Why is it being discussed in Japan?
The first sales tax in Japan — at a rate 3 percent — came into effect in 1989, but since then reduced tax rates have never been implemented.
New Komeito, the junior partner of the ruling Liberal Democratic Party, insisted on introducing reduced rates when the consumption tax was raised in April, as it places emphasis on welfare.
While no reduced rates were included with April’s hike, the coalition camp did reach an agreement last year that lower rates on items for daily necessity will take effect “sometime” after the sales tax goes up to 10 percent.
The ruling camp earlier this month started conducting hearings with industries across the board as it will need some support from them to implement the system. With Prime Minister Shinzo Abe scheduled to decide by the year’s end whether or not to implement the second phase of the tax hikes in October 2015, the decision on reduced tax rates will have to be reflected in the ruling coalition’s tax guideline by the end of this year.