Aera: 10% or 30% Consumption Tax?

Aera wonders if the 10% consumption tax proposal means a thing. In its August 2 issue, they note that the good people of Japan tend to live so terribly long that how can the state possibly be supposed to provide welfare for all of its subjects?

Currently, the VAT rate is still set to a very conservative, accross-the-board, 5%, compared to other OECD countries (Sweden tops the list at 25% but does have lower rates for important things like books).

Prime minister Kan muddled the waters before the last election, noting that it may have to be raised. Consumers Union of Japan and many others are against an increase - hoping that the state will somehow reduce expenditures (such as military spending) rather than burden said subjects more.

Then, Kurashi is fortunate to have readers who do send in rather intelligent comments. What do you think about the consumption tax/VAT in Japan?

消費税 shouhi-zei is a rather loose term that implies all kinds of excise duties, thus generally translated as VAT or "consumption tax." VAT (or value added tax) may be argued to be a very different monster.

How I wish, just for once, that the clever folks watching over Japan's finances over in Nagatacho would come up with an indigenous term that actually made sense to, hrm, the "subjects" so to speak.

Citizens, as good consumers, are now faced with a dilemma.

On the one hand, the government and the big companies and just about everyone else want Japanese people to consume more. On the other hand, from an environmental point of view, and if we really wanted to reduce Japan's ecological foot print, and reduce greenhouse gas emissions, and provide a real model for how we all ought to live on this small planet, we should make every effort to promote efforts to lower consumption - asking said subjects to consume less.

Less consumption makes sense, per capita, in a post peak oil era.

Except if you are stuck in the thinking that Japan should somehow magically revert to the bubble days of the late 1980s (an era that Time Magazine - and others in the US media - still seem to regard as Japan Inc.'s golden standard, "clouded outlook" or not).

In the UK, the VAT is currently 17.5%, but that will be increased to "up to 20%" according to BBC on June 22, 2010.

If Aera is right - not even if the VAT was raised to an OECD record level of 30%, would Japan really provide a sustainable model for the rest of the world?


With an increase to 10%, would the VAT support the pensions for people in "long-living hell?"


steveb said…
Interesting idea to consider. I think, however, the ramifications might ultimately be negative for the populace.

While raising the consumption tax a certain degree may seem reasonable when compared to the tax rates of other nations, I'm afraid of the effect higher taxes would have on the cost of living, which is already high, as well as the standard of living, which frankly could be higher.
Pandabonium said…
I think the world economy will be shrinking in coming years. If I'm correct, then there is no way that current levels of spending for anything will be sustainable and this problem will have to be addressed by deciding where the cuts are going to come from. I vote for the "defense" budget as a starting point.

Consumption tax is OK by me IF the necessities such as rent, food, and medicine are exempted. That makes it somewhat more fair across income levels.

Personally, I've never trusted the government to provide for my retirement. In Japan, it appears even worse than in the US - they can't even keep track of the money it seems.

Like it or not, I think we're headed for the age old (pun intended) system of young folks taking care of the old folks in a multi-generational household. The fossil fueled economic free ride is coming to a close.
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Tom O said…
Maybe the powers that be + the abacus users know something we dont. Nothing to worry about (though being a government` there is always that worry, as said). Re the `long living citizens` issue the word I would use is attrition. Population of Japan in the late 80s - around 140 million, now its around 128. Those old people are not getting any younger. And, so we are told, there not enough younger people getting older. In most countries populations are increasing (that of the UK is going to see a big spike at some point, babies born to foreign-born mothers - but thats another issue and one not likely to affect Japan in the near future) therefore `the future` has to be taken into account. Here, different criteria apply. If the population now is around 128m what will be in 10/20 years?? Someone must have a good idea, thus no big jump in any tax. Attrition..
Martin J Frid said…
The fossil fueled economic free ride, or the nuclear power fueled energy free ride, or the monoculture food production free ride...

Thanks for the comments.

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