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Japan Raises Consumption Tax to 10%
Today Japan boosted its general consumption tax rate to 10% from 8% to help pay for government welfare programs for the country’s aging population.
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Today Japan boosted its general consumption tax rate to 10% from 8% to help pay for government welfare programs for the country’s aging population.
The hike is expected to generate 4.6 trillion yen ($42 billion) in revenue, The Nikkei says. The increase originally was planned to occur in 2014. But Prime Minister Shinzo Abe has delayed it twice.
When Japan raised the tax to 8% from 5% five years ago, the move plunged the country into a two-quarter recession. Consumer spending, which accounts for 60% of Japan’s economy, shrank 5%. Car sales fell 3%.
This time, the government hopes to avert another slump with several stimulus measures, The Nikkei reports. Several options will be finalized later this month.
In the meantime, the government today launched a 5% rewards program for cashless transactions. The scheme involves 500,000 small and medium-sized stores.
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