Three-quarters of the public is against the second stage of consumption tax hike planned for October 2015, after taking a heavy blow from the first stage in April, according to the latest survey.
In a survey carried out by Jiji Press over four days through last Sunday, 74.8 percent of the 1,254 respondents said they oppose raising the tax rate again and 22.6 percent said they support it.
Of the opponents, 70.0 percent said that the plan to double the 5 percent levy to 10 percent will impose a new burden on households. With multiple answers allowed, 51.5 percent cited a lack of efforts to reduce wasteful government spending and 48.0 percent said the increase would place unfair hardship on the poor.
Meanwhile, 72.8 percent of those in favor of the tax hike said the move is needed to ensure the sustainability of the social security system.
Prime Minister Shinzo Abe is slated to decide later this year whether to go ahead with the second stage of the hike after examining the impact of the first stage, completed in April, on the economy.
Government data released Wednesday showed that real gross domestic product in April-June plunged at an annualized rate of 6.8 percent from the previous quarter, led by a record drop in personal consumption.
Also in the Jiji survey, 80.9 percent of the public said the Abe administration should introduce a special reduced tax rate for daily necessities if it follows through with doubling the tax to 10 percent as expected.
Of them, 91.7 percent said the reduced rate should be applied to food. Only 11.8 percent called for special treatment to cover newspapers. Books and magazines were cited by 9.3 percent.
Reflecting the anxiety, industries hold mixed views on the course of consumer spending, with automakers saying difficult times lie ahead. But some retailers see no signs of a worsening business environment.
In the auto industry, large orders received by the end of March, or before the tax hike, surpassed production capacities and deliveries were delayed into April or later for many customers.
As a result, automakers’ April-June earnings suffered little damage from the tax hike and concerns are now growing that their July-September earnings may be hit hard instead.
“It’s too early to conclude that the subsequent fall in demand following the pre-tax hike buying spree turned out to be small,” an official at Nissan Motor Co. said.
An official of Suzuki Motor Corp. said, “The impact of the tax hike is lasting longer than we expected, giving a blow to our business.”
Meanwhile, electronics retailer Bic Camera Inc.’s sales are showing resilience, with the pace of their year-on-year fall slowing to 7 percent in July from about 20 percent in April.
Edion Corp. and K’s Holdings Corp. also enjoyed a remarkable recovery in sales in July.
Among department store operators, Isetan Mitsukoshi Holdings Ltd. saw its sales post year-on-year growth in July for the first time since the consumption tax hike. Takashimaya Co. is also achieving a smooth recovery, with the margin of sales decline narrowing every month.
Beer maker Suntory Holdings Ltd. believes that the tax hike had only a limited impact on its business.