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.