New Consumption Tax

With the beginning of October 2019, Japan has raised the consumption tax from 8% to 10%. Compared to the 20% I’m used to from Austria, this seems rather puny, but then again, it’s another hike from the only 5% it was back in 2014.

It seems that consumption taxes are a rather touchy issue in Japan, with the first consumption tax ever being introduced only in 1989 (and with a rate of 3% only). Not even 10 years later, in 1997, the new government raised the tax to 5%, and only in April 2014, the tax had been raised to 8%. That is a doubling of taxes in only 5 1/2 years, quite a hike indeed!

Of course this didn’t go smoothly at all, even in a country where conformity and obedience to the higher-ups in the hierarchy is practically mandatory. And especially elderly people often have only a tiny pension, and it can be very hard for them to make ends meet. Whether the government had them in mind when it come up with a number of (rather interesting) exceptions to the 10% rule, I do not know.

new taxes in Japan

However, “items necessary for daily living” are still taxed at 8%. As you can see above, that food and drink as bought at a supermarket or delivered, but not alcohol or dining out, which are taxed at 10%. This can lead to interesting situations like at the Starbucks, where the barista must now ask you whether your coffee is indeed “to go”, so they can apply the correct amount of tax. On the other hand, they are not to bother customers who consume their coffee indoors after all.

Fun fact: newspapers are also considered “necessary for daily living”. Books are not, sadly…

Anyway, for me, that is, the company, this change in taxes does not make a difference. My services still incur 10% taxes, and for foreign customers, there’s no tax at all. I still have to change all my invoice templates to reflect the new amount, but since they are printed only when I need them, it’s not a big deal.

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