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My Number system to be used for sales tax refunds when levy hiked to 10%

JIJI, Kyodo

The Finance Ministry is planning to tap into the new My Number ID system as a way to provide consumers with refunds on certain goods when the consumption tax is hiked from 8 percent to 10 percent in 2017, sources said.

Under the ministry’s plan, consumers would be required to pay the 10 percent tax rate on all goods, but would be eligible for refunds on the 2 percentage point tax hike portion for some products.

The reduced tax rate of 8 percent would be applied to all food and beverage items, except alcoholic drinks, when the tax rate is increased to 10 percent in April 2017.

To facilitate the refund, people would present their 12-digit My Number card, which will be distributed to all residents in Japan from next January, to make purchases.

The government would then use My Number to collect and store purchase data, while taking strict information protection measures to prevent personal data leaks, the sources said.

Names, addresses and birthdate information on the cards, which have been created as part of a centralized system for tax and social security, would not be read, the sources added.

Purchase data would be converted into points, with consumers required to go online to determine how much they will receive in refunds from their points.

They would then need to apply for a refund, which would be deposited into a pre-registered bank account.

Finance Minister Taro Aso said the ministry aims to put emphasis on assisting low-income earners, saying it intends to set upper limits on the tax refund in accordance with the amounts purchased by consumers. Some sources said the refund cap is likely to be at least ¥4,000 per person for a year.

The ministry presented the scheme to the ruling bloc of the Liberal Democratic Party and Komeito on Tuesday.

The two parties are hoping to work out details by the end of the year, when they will adopt a tax reform package for fiscal 2016 from next April.

But there are some hurdles in introducing such a system, as retailers selling food and beverages need to install terminals to read shopping information, which would likely cost time and money.

During discussions held by senior lawmakers of Komeito, some expressed concern over utilizing the My Number system, according to sources close to the meeting.

Sadayuki Sakakibara, chairman of Keidanren, which opposes selling certain goods with a reduced tax rate, said the ministry’s scheme was worth considering.

The tax shortfall resulting from the refunds is estimated to be about ¥1.3 trillion a year, according to the ministry, with the ruling parties needing to secure financial resources to meet the gap.

  • Firas Kraïem

    What is this nonsense? Why can’t they just not increase the price of those items?

    • Ken Yasumoto-Nicolson

      Apparently, having two tax rates is too complicated is the official excuse, but this seems even more complicated to me. Indeed, I just finished doing a small online training course at work for My Number, and one item that was highlighted was that it will be illegal for companies (the examples were video shops and electrical superstores) to even request to see your My Number card, but now we’ll be expected to hand it over with our point cards!

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  • President Grace 2016

    my head hurts while reading this. i need stronger coffee.

  • goseki

    consumption tax should apply to everything .. sure it takes a little time to adjust to new prices, but to introduce some sort of exemption system or worse rebate system such as this .. borders on stupidity.
    If you raise these taxes you need to balance it with a decrease in income tax.
    10% is a nice sensible level to use.

  • Jay

    Dumb, dumber, and dumbest. Hugely complicated, but also downright scary: a digital monitoring system for your every shopping visit? Then how will consumers get the rebates? Only by registering their banking information with Big Brother, who will periodically make a deposit?

  • Roy Warner

    In other words, with My Number, the government will know everything you buy in addition to every time you visit a physician and for what ailment. The administration of this rebate system will cost much of the revenue to be gained by the increase and personal information will be at risk no matter what kind of encryption system is implemented. Why not raise income taxes instead?

  • Doubting Thomas

    It boggles the mind that they saw how badly going from 5 to 8% hurt the economy, but still plan on going to 10%. This is insanity. Consumption tax hikes only effect low-income families. They need to increase the cost of a pack of cigarettes to 1000 yen, increase marginal tax rates on the hyper-rich, tax stock trades (by a tiny, tiny percentage), and cut government waste if there’s a tax shortfall.

    • Oliver Mackie

      “Consumption tax hikes only effect low-income families”

      Nope. They ‘affect’ everyone, as everyone consumes.

      “They need to increase the cost of a pack of cigarettes to 1000 yen”

      Now that certainly will affect low-income families….

      “….cut government waste if there’s a tax shortfall.”

      It may surprise you to know that government spending as a %age of GNP is comparatively low in Japan. Recent (2012-2104) approximate figures:

      France 47%
      U.K. 42%
      Germany 30%
      USA 24%
      Japan 19%

      The problem with the Japanese government finances is not over-spending but highly cyclical revenue, which, due to its cyclical nature, has been low (mainly due, until very recently, to low corporate profits and stagnant personal incomes.) The use of increased consumption tax rates is a sensible way to bring much-needed greater stability to government in-flows.

      • qwerty

        nice one – good spelling.

        “Consumption tax hikes only effect low-income families

        Nope. They ‘affect’ everyone, as everyone consumes.”

        yep, but consumption tax hikes are only ‘felt by’ low-income families – they only ‘hurt’ low-income families – wealthy people don’t even ‘notice’ them

        “They need to increase the cost of a pack of cigarettes to 1000 yen

        Now that certainly will affect low-income families….”

        not if they quit smoking. fruit and vegetables however, aren’t a luxury (should I have put a semicolon in there??)

      • Oliver Mackie

        No, where the consumption tax is applied to all purchases (as it is in Japan), it affects everyone equally, e.g. a 5% increase in consumption tax across the board will reduce everyone’s purchasing power by approximately the same amount, in percentage terms. (BTW, my putting of the word affect in inverted commas was not a comment on the original poster’s spelling, but rather an acknowledgement that the effect on poorer and wealthier people will be different – see below.)

        What I think you meant to refer to are purchases of food, where it is indeed true that families who are currently only just able to afford a sufficiently nutritious diet will see a negative impact on health with a consumption tax rise. Consideration of such real-world impact is why the government chose to exclude food from the next increase. It is also why I would agree that consuption tax should not be applied to food in the first place (like in the UK) but that wasn’t what the original poster was suggesting.
        Staying with policy decisions that affect real people in the real world, I find your comment that poor people should just give up smoking at apparent odds with your self-purported sympathy for the poor. The reality is that resort to smoking and drinking to relieve stress is far more prevalent among the poor in developed economies such as Japan, simply because, after essentials have been taken care of, they are the two most cost-effective reliefs from the stress of life available. To price these out of their hands is to make their lives far more stressed. Indeed, the perceived need for these stress relievers may be such that marginal income families may seek to keep some of them by compromising on food. Double whammy.
        In such cases, I’m sure people such as yourself will be on hand to suitably berrate them on their ‘irrational’ and ‘irresponsible’ choices. (Again, those terms are in inverted commas for a reason.)
        One doesn’t actually have to be partial to the AOC product itself, in order to be a champagne socialist. A commitment to dogma over reality, hypothetical serfs and proles over real living people with all their imperfections, will suffice. Seems to me you fit the bill.

      • Doubting Thomas

        There is empirical evidence suggesting that consumption taxes don’t affect the upper class. Hard sales data.

        As for the idea that it affects people equally, here’s some math for you. If someone who makes a million dollars a year only needs to spend $100,000 (pre-tax) to support their family, a 10% consumption tax adds 1% to their marginal tax rate. If someone who makes $20,000 has to spend every dollar they make to support their family, that adds 10% to their marginal tax rates. Somewhat extreme examples, but entirely plausible. Consumption taxes affect low-income people magnitudes more than upper-class people. Why do you think the megarich move to Monaco?

        Smoking puts an unjust burden on the healthcare system. Therefore, people should be encouraged to not smoke (or drink, to excess). Taxing pornography some amount might be a good idea, too… because it would be such a huge source of tax revenue.

      • Oliver Mackie

        Thank you for the Economics 101 course. You still haven’t spotted that I was being pedantic about your insufficiently precise use of language (which is the medium of communication here – you are what you write) rather than anything about mathematics, economics et al.

        LITERALLY SPEAKING, rises in consumption tax where all goods and services are taxed (as they are in Japan) affect all equally, in percentage terms, in terms of the reduction of potential total spending capacity. Hard logic for you there.

        OF COURSE, when it comes to ‘essential’ items, those on lower incomes will feel the impact ON SUCH SPENDING as much stronger (in terms of having to make hard spending choices and even, for those on marginal incomes versus the cost of food. clothing, housing, and transportation, resulting in dangers to personal well-being) than those on higher incomes.

        But that wasn’t what you initially wrote, and I have managed to prod you into the correct amount of linguistic precision. Finally.

      • qwerty

        who says (these days) that smoking relieves stress? it doesn’t – it makes people tired and sick (and dead) – more stressed
        and not only poor people should quit smoking – smokers cost a ton when they get sick

        exercise is free

        “(Again, those terms are in inverted commas for a reason.)”

        they’re not “inverted commas”

      • Oliver Mackie

        “who says (these days) that smoking relieves stress?” About 1 billion smokers.

        More important is that you think your opinion, on the merits or not of potentially trading off X amount of shortened lifespan for the benefits of smoking, is more important than that of any other human being. It isn’t.

        “smokers cost a ton when they get sick”

        In all industrialized countries with publicly funded healthcare, smokers pay far more in tax than the extra costs they impose on the system. The UK government, for example, is actually ‘addicted’ to tobacco revenue. If they banned smoking, funding shortages in the National Health Service would be severe.

        Don’t get me wrong, personally I think smoking isn’t worth it (I speak from experience.)

        [If you want to continue proofreading exchanges (I already explained in my first post the reason for putting affect as ‘affect) then see below:

        Who says (these days) that smoking relieves stress? It doesn’t. It makes people tired and sick (and dead), more stressed. And not only poor people should quit smoking: smokers cost a ton when they get sick.]

      • qwerty

        “About 1 billion smokers” may think smoking relieves stress, but it doesn’t

        smoking becomes a necessity – adding stress until the perceived relief – a placebo effect – drugs are pretty clever

        my opinion is not “more important than that of any other human being” – it’s just right

        the total cost of sick smokers outweighs the tax they pay

      • Oliver Mackie

        “my opinion is not “more important than that of any other human being” – it’s just right”

        HA HA HA HA…..

        Arrogant ever?

      • qwerty

        HA indeed – more low-level personal attacks – you should stick to pedantics – seems to be about your level. (boom!)

        tobacco does “become” a necessity (after the initial “highs”) – the effect of the fix is to reduce that “need” that is only there because of the original hit. there are no more “highs” just “needs”

        tobacco plays with the smoker’s mind – yeah, pretty clever, but the mind is a powerful thing – yours too

        if you see it as a placebo effect, then you take away the drug’s power

        when I smoke tobacco my dopamine levels don’t rise, do yours?

        do you understand? drugs are bad

        “Arrogant ever?”

        right back at you, kiddo

      • qwerty

        you are a contradiction
        you are an arrogant self-righteous bore (no offense)

      • Oliver Mackie

        “smoking becomes a necessity – adding stress until the perceived relief – a placebo effect -”

        “drugs are pretty clever”

        Unlike yourself:

        “smoking becomes a necessity – adding stress until the perceived relief – a placebo effect -”

        This is a contradiction. Smoking cannot “become a necessity” (i.e. become addictive) if the effect is only a placebo. Nicotine is a proven stimulant, raising levels of dopamine in the brain. The effects are not at all imagined. Dopamine is a pleasure trigger. It relieves stress. Tobacco is certainly addictive over the longer term.

      • Oliver Mackie

        “the total cost of sick smokers outweighs the tax they pay”

        Official figures:

        UK 2013-2014, total cost to the National Health Service of treating smoking-related disease, GBP 2 billion.

        Total revenue to the government from tobacco products: GBP 12 billion.

        On a national scale, very profitable for the public sector.

      • qwerty

        “Official figures:”

        “Ha” – any real figures for japan?

      • Doubting Thomas

        For all practical purposes, they do not affect the rich, because the rich only spend a very small amount of their income compared to low-income families. So a consumption tax effectively adds a big chunk to those families’ marginal tax rates. It has also been shown that the April tax hike MURDERED spending on low and mid-range items, but didn’t so much as dent spending on high-end luxury items. The rich just don’t care.

      • Oliver Mackie

        I refer to you to my response to another poster just below (or above?)

  • jcbinok

    A double whammy from the government: “Pay more taxes and give us more personal info to get a little cash back.” If I could vote in this country, I would vote for any politician who opposes this bill.

    • Jay

      Actually, the more I think of it, the more I think government is counting on a significant percentage of the population NOT opting to use their card. Triple whammy.

      • Oliver Mackie

        If so, that would make it rather a clever idea, no? Those who really need the refund will apply for it. Those who aren’t so bothered might not. Effectively a self-implementing progressively-fluctuating tax.

      • Jay

        Personally, I think they’re better off raising the tax on everything else, but removing it completely from all food products (except restaurants). As mentioned elsewhere, tobacco and alcohol could go a lot higher. Scotch in Japan is half the price of what it is in Canada….woops! Shouldn’t have said that. Shhh. Keep it quiet.

      • Oliver Mackie

        Not if you’re trying to help the poorer members of society. I refer you to my other post(s) in this article.

      • Jay

        Sorry. Don’t see it. Food is a basic necessity that shouldn’t be taxed. Scotch is a luxury that most low-income people do not buy. However, another few hundred yen on the price of a single malt isn’t going to stop me buying it. As for tobacco, it’s a good idea to encourage all people to give up–will save in the long run on healthcare costs. Cigs are $20 a pack in Oz (1800 yen?). The same logic could apply to cars: big tax on high cc gas guzzlers, lower tax on hybrid, electric, fuel efficient.

      • Oliver Mackie

        You are starting from the assumption of a behavioural blank slate, which is not something that exists in reality. The real question is, “what happens to the welfare of those on (near-)marginal incomes, once you start increasing tax on alcohol (not just Scotch) and tobacco?” There is plenty of real-world historical data available, and it’s pretty clear what happens.

      • Jay

        Eventually, they are persuaded to quit, thus saving them money. There’s also data available on the correlation between smoking and the cost of smoking, and the ratio is inverse. Anyway, what remains to be seen is whether this complex information gathering-refunding system the government is planning (proposing?) will pay for itself or actually end up costing more than the tax it collects.

      • Oliver Mackie

        “Eventually, they are persuaded to quit, thus saving them money.” Not correct. Just take a look around. See all those teetotalling, non-smoking, non-gambling poorer people?

        “There’s also data available on the correlation between smoking and the cost of smoking, and the ratio is inverse.” Not across income brackets.

      • Jay

        can’t seem to paste this, but google, “raising tax on tobacco World Health Organization.”

      • Oliver Mackie

        In return search “bobak poverty and smoking”

        Again, don’t confuse total smoking levels with levels across income groups. In every country you care to look at, the poor smoke more than the rich. Additionally, current smokers have been shown to be highly inelastic to price changes. Combine the two, and you cannot in the same breath state that increasing the consumption tax on food would hurt the poor whilst at the same time saying that massive increases in the prices opf alcohol and tobacco would do them good.

  • GBR48

    Ridiculously complicated. Huge implementation expenses for a miserly cash-back, extra tech and longer queues.

    Double consumption tax and zero rate all food and non-alcoholic beverages.

  • Olivier AMMOUR-MAYEUR

    The best idea to make sure a very tiny % of people will ever apply for refund.

    Also, the best way to know what people are buying, and when and where people are going shopping…
    I wonder how much the government will spend on all this system (to start it, but then also annually to “make it work”, when they actually are complaining about the shortage of tax income already…
    As we say in France: this is a “Usine à gaz” (a gas factory), meaning it produces more waste than effective products.
    And also, finally, the hike of taxe rate on food is insane when one already knows how expensive fruits and vegetables are in Japan, compare to anywhere else in the world.

  • qwerty

    i speak well my lord, shore

  • qwerty

    let’s speak together

  • qwerty

    nice?

  • qwerty

    i wanna