Japan's planned food tax cut faces consumer, retailer skepticism
Ideas
There seems to be many positives and negatives related to the proposed consumption tax rate decrease and many on both sides seems to think its not a good idea.
But it seems a little strange as back in 2014 and 2019, the two times there were consumption tax increases consumers voted by decreasing their buying but of course later they went back to normal and bought as usual.
Most likely, Japanese consumers probably are thinking a 2 percent decrease in the consumption tax is not going to make that big of a difference as they might think too, companies will increase prices anyway to make up the difference.
While some might not agree with the decrease in the consumption tax, most likely the lower income groups in Japan, the fixed income groups, and those who have irregular jobs and part time jobs might like the reduced food tax as they might have to pay less for their purchases.
At one time, even recently, Japanese companies were very reluctant to increase prices or pass-on their increased costs to the retail consumer, as they would just absorb their material price increases as a way to keep their customers happy but those days seem long gone now.
These days, it seems, profit margins of many companies have become very thin and now they feel they have no choice but to increase prices even at the detriment of maybe losing some customers.
Yes, the potential consumption tax decrease might not be fully felt by consumers as companies will, no doubt, or some companies, no doubt, will increase their prices as a way to maintain their profits margins and this might be a sign of the new Japan that is becoming, unfortunately, more like the west in how they do business.
There seems to be, for the most part, now, no turning back as companies are placing greater emphasis on their share-holders and profits and less emphasis on keeping customers happy which was what they used to do for decades.
The Japanese government is well-known for significant spending as it has one of the highest if not the highest debt to GDP ratio among advanced economies globally.
The problem is once a government continues to spend it becomes a habit and they can't find any other strategies to improve the lives of society other than spending more each time.
Many Japanese consumers, especially the upper income groups, like anywhere, are focused on the quality of a product and not just the price or a product which for many might not be that important.
But for the middle income and especially the lower income groups price is still the most important variable and of course quality is important but price is the main variable when buying things.
And yes, some products maybe the quality of the product is more important than price but, again, for the average consumer who might not buy the high quality meat mentioned in the article price is still the most important variables for the majority of consumers in Japan.
Talking about one Japanese shop that places greater emphasis on the quality of the product and not the price might not be representative of all shops as again, not every consumer in Japan can afford to buy the high quality beef mentioned in the article.
Yes, the continued increase in material cost, packaging costs and so on will still be there as companies and shops will have to continue to decide what do to after the consumption tax decrease and most likely they will increase prices, which means they are passing-on their costs to the retail customer.
Of course, for high quality products like the high quality beef shop mentioned in the article the consumption tax decrease probably will not make that much of a difference at the customer as base of the Japanese meat shop want high quality meat and is willing to pay a higher prices and probably again, won't think much about the decreased consumption tax situation.
Yes, due to, again, the increase in material costs and packaging costs, the Japanese consumer might not see much of a decrease as companies will no doubt continue to increase costs or pass-on their costs to the final retail customer which might never see the real benefits of the decreased consumption tax.
For some, it might the idea of just kicking the can down the road, so to speak, as consumers will continue to see high prices and the consumption tax, in of itself, didn't do anything for the average consumer in Japan.
As in Sept/Oct. of 2019, the average consumer in Japan was confused with what was going to be taxed and what wasn't and the tax rate proposals at the time seemed very confusing and there was a lot of un-needed emergency buying as consumers didn't really know what was going on and actually some started or horde products as they didn't know what would be taxed and what would be taxed in Sept. of 2019.
And yes, unfortunately, some industries or sectors such as the food service industry or even the restaurant sector might see significant stress and they could potentially lose a lot of business in the process.
And again, as there was a lot of confusion in 2019, there seems to be even more confusion as to what is going to happen and who is going to benefit and who is going to lose out, and the uneven consumption tax rates, initially, might help consumers but at the same time, might significantly hurt some shops and some restaurants too.
In a marked economy, unfortunately, helping one group means less benefits for another group which seems to be the case here, as consumers might get some initial benefits but at the same time some sectors might get less benefits or even some might feel harmed but the consumption tax decrease or even the un-even distribution of the overall tax scheme in Japan.
As mentioned in the article, again, there seems to be a lot of confusion as to who is going to benefit and who is not going to benefit as most likely, as always, unfortunately, the small shop owners are feeling the most stress with the new proposed consumption tax decrease and uneven tax situation and hopefully by 2027 they can get it sorted out so that there is benefits fr for across the board in Japanese society and the Japanese economy.
Have a nice day!
Article source: https://mainichi.jp/english/articles/20260806/p2a/00m/0bu/049000c
