AlwaysAisle

Now that it is a month till increase of consumption tax (消費税) that news in Japan is filled with topics of consumption tax, pretty much cannot avoid it if you read or watch news these days. Sure, I am learning a lot about Japanese consumption tax… I do not know if it is good thing or not…

When Japanese consumption tax increased from 3% to 5% in 1997 GDP (gross domestic product) of Japan three months prior to the increase of consumption tax increased by 3.1% compare to previous year. Where GDP of Japan three months after the increase of consumption tax decreased by 3.9% compare to previous year. Japanese government is expecting similar situation when consumption tax will increase from 5% to 8% this April 1. Where on October 1 next year consumption tax will increase from 8% to 10% and some are predicting more people are purchasing high end items prior to April 1 this time around compare with consumption tax increase of 17 years ago. Where some are indicating larger effect on GDP of Japan this time around due to another increase of consumption tax taking place next year.

Matsuzakaya department store has extended store hours by one hour during month of March expecting increase demand of high end items such as jewelries. Mitsubishi Electric has seen increase of demand for house hold air condition units (looks as people are not waiting till summer but buying before April 1) that the production is now open seven days a week, production workers are cashing in overtime pay on Saturdays and Sundays. Mitsubishi Electric is expecting the demand will die down in April and expecting production will go back to normal 5 days/week schedule.

The law concerning consumption tax indicates that tax is due based on when the service was rendered, not when the payment was made. For example, if purchasing a new car and made the payment before April 1. But if actual delivery of the car is after April 1 then 8% consumption tax have to be collected. So sounds like what Gold’s Gym said is correct as far as consumption tax law is concerned. If using gym facility in month of April, then it is considered service is rendered during April so 8% consumption tax will apply even though if membership fee was paid prior to April 1.

However, each business is handling situation differently. Businesses which are open 24 hrs. such as convenience stores and family restaurants have their register set to change from 5% consumption tax to 8% consumption tax at 12 midnight on evening of March 31. Family restaurant chain Skylark is saying at right around 11:59 p.m. March 31 they will ask customers in a restaurant to pay the bill which will be handled with 5% consumption tax and any further orders placed after 12 midnight will be charged 8%.

Izakaya chain restaurant which is not open 24 hrs. said that on the evening of March 31 they will keep 5% consumption tax till closing including orders after 12 midnight. JR is increasing fares on April 1 due to increase of consumption tax. However, if buying Shinkansen ticket for April 5 trip today, fare will be based on today’s fare, not the new fare set on April 1. Under situation like that what happens to 8% consumption tax based on when service was rendered, not when the payment was made? Situation like this with this Izakaya restaurants and JR, the business will be flipping 3% difference in consumption tax out of their own pocket.

Those are business decision made individually. So Gold’s Gym could made a business decision to shell out 3% difference in consumption tax out of their pocket for members who paid membership fee prior to April 1. However, as far as law concerning consumption tax is concerned, Gold’s Gym is not doing anything against the law.

I am learning so much about Japanese consumption tax by reading and watching news lately…

hailstorm

Postal rates are going up for the first time in 20 years from April 1st. As a result, a 2 yen stamp is going on sale from today.

Domestic postcard rate will rise from 50 to 52 yen, while domestic letter rates will rise from 80 yen to 82 yen.

BalbC

I think all these yens here and there are going to be annoying.
They are avoiding this on the trains by keeping the cash fares at in 10 yen increments (so raising prices more than the tax increase) as the vending machines can't handle small coins. JR East and some of the private rail companies will do only the actual increase for Suica/Passmo pares, so using cards will be a bit cheaper than cash. I wonder what will happen with other vending machines though, probably most will absorb the increase and keep the same prices?

I also notice Seiyu have already started to do their prices without tax; bloody Americans.

hailstorm

Same for the busses.

AlwaysAisle

I saw a news program which showed how vending machines will be affected by consumption tax increase. According to this news program most vending machines in Japan are not directly owned and operated by a manufacture of the product. Most of those soft drinks vending machines are not owned and operated by Coca Cola Japan nor Suntory, but those vending machines are owned and operated by third party companies contracted by such as Coca Cola Japan or Suntory.

Third party companies which own and operate vending machines get contract with an owner of a building or an owner of a property to install, operate, and maintain vending machines at a specific location. The contract specify pretty much everything regarding the vending machine. Vending machine operating companies cannot change the content of vending machine without consent of an owner of a property where a vending machine is located. This prevent such situation as a vending machine used to sell soft drinks, but suddenly a vending machine was changed to sell adult magazines. The contract protect an owner of a property where a vending machine is located from such situations.

The contract also specifies prices of contents of a vending machine. The company which own and operate vending machines cannot change the price of the content of the vending machine without a consent from an owner of a property where vending machine is located. The news program showed one company which operate vending machines. This company operates more than 20 thousands plus vending machines in metropolitan Tokyo area (東京２３区) alone. Sales people at this company have to visit owners of a property where vending machine is located and have to get a consent to increase the price of vending machine content due to increase of consumption tax.

If an owner of a property where vending machines is located does not agree with a consent before April 1, or a sales person from vending machine company simply could not get to a property owner before April 1 then prices of contents in that specific vending machine cannot be raised.

It is possible that among same Coca Cola vending machines there will be price difference after April 1 because of the situation like this. It sounded like for a vending machine operator profit margins on vending machines are very small. If they cannot raise a price of contents of vending machines by April 1 then those vending machines with old prices will be operating on loss starting April 1.

Learning too much about behind the scene of consumption tax increase in Japan from all those news programs...

jib71

More likely they just won't get refilled.

I remember my father telling me about growing up in 1940s and 50s London, where the chocolate vending machines were all empty ... but still showed pre-war pricing. I think it was quite a disappointment to him and the other 11-year-olds, when rationing of candy ended in 1953. The machines were refilled but the prices that he'd been gazing at longingly were also revised ...

valve bouncer

Norm Gunderson: They announced it.
Marge Gunderson: They announced it?
Norm Gunderson: Yeah.
Marge Gunderson: So?
Norm Gunderson: Three-cent stamp.
Marge Gunderson: Your mallard?
Norm Gunderson: Yeah.
Marge Gunderson: Oh, that's terrific.
Norm Gunderson: It's just a three-cent stamp.
Marge Gunderson: It's terrific.
Norm Gunderson: Hautman's blue-winged teal got the 29-cent. People don't much use the three-cent.
Marge Gunderson: Oh, for Pete's sake. Of course they do. Whenever they raise the postage, people need the little stamps.

hailstorm

I've noticed a fairly significant increase in stores closing down this month. I wonder if that has anything to do with the costs of converting over to an 8% sales rate?