The Strategist

Japan increases consumption tax from 8% to 10%

10/01/2019 - 09:45

Starting from October 1, Japan increases its consumption tax from 8% to 10%, despite concerns that this would worsen the country's economy.

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Most of all, the tax hike is expected to affect poor families who have so far barely made ends meet, Kyodo News notes. Despite the fact that the majority of foodstuffs and drinks were taken out of the high taxation, the increase in prices for other everyday goods and the growing utility bills cannot but affect the situation.

The governments said they did enough to minimize the negative effects of tax increases.

When this tax was raised earlier, from 3% to 5% in 1997 and to 8% in 2014, this led to a recession.

Prime Minister Shinzo Abe deferred tax increases twice. According to him, a tax increase is necessary to solve the problem of population aging: the growing share of the elderly requires an increase in state budget expenditures, despite the fact that the public debt now exceeds GDP.