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Households hurt in April fear 10% levy: survey

75% oppose second stage of sales tax hike

JIJI

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.

  • phu

    (Requisite mention of small sample size, lack of citation for the actual survey and its methods.)

    OK, that said, I’m glad they at least drilled down a little bit by providing at least a few options regarding why people chose the options they did. I think the most interesting thing about this is that the survey clearly did present valid reasons for both the for and against positions; from this article, though, it looks like only one response was allowed.

    Given the close split on the against votes, I think if they’d simply left off the support/oppose and asked people to select all the benefits and/or detriments they thought would come from the further hike, it would’ve been a lot more nuanced and informative. I also think the “against” verdict here would have less of a margin if we looked at what people thought of both the good and bad effects.

    Yes, the government absolutely should be tamping down wasteful spending. They won’t, just like the US government won’t, because both operate at the whim of lobbyists, party lines, and campaign contributors. Yes, the tax is regressive, and it’ll hit the poor hardest. Yes, the tax — given the inflexibility of government spending — is important if Japan wants to keep its social security net running (for a little longer, at least; it simply can’t survive the nation’s aging and workforce depopulation indefinitely). Taking any one of these things and making it the basis for a polar position ignores the rest, as well as factors not mentioned here; hopefully most people are thinking a little harder than that.

    If things keep going the way they have been, Japan will get its next tax hike, whether the people want it or not. Unfortunately, the wisdom of the crowd very rarely lives up to its name (no matter what country you’re in), so I’d say cross your fingers and hope that whatever the arbitrary government forces through or the knee-jerk public demands ends up working out well in the long run.