With only about 20 days left before the introduction of a higher consumption tax, consumers need to work out a clever buying strategy. The tax rate raise from the current 5 percent to 8 percent starting on April 1 will place a greater financial burden on households and businesses. But consumers need to be careful when making purchases since there may be cases in which rushing to beat the tax hike will cause problems for their household budgets.
According to an estimate by Mizuho Research Institute, the 3 percentage point raise in the consumption tax rate will increase the annual financial burden by an average ¥57,529 for households whose annual income is less than ¥3 million and by an average ¥142,147 for households whose annual income is ¥10 million or more. In addition, planned increases in premiums for corporate pension and decreases in benefits under the nursing care insurance system will raise the burden of households.
When the consumption tax was first introduced in April 1989, people rushed to buy things from mid- to late March that year. It is likely that consumers will act similarly this time. A private research organization estimates that last-minute demand before the consumption tax raise this time will top ¥9 trillion, 1.7 times more than just before April 1997, when the consumption tax rate was raised from 3 percent to 5 percent.