Let me get a show of hands, who likes paying taxes? … Nobody? I’ll give bonus points to those non-Japanese taxpayers who live in Japan but have no say whatsoever in how the money collected will be spent. … I think I see a lady at the back raising her hand. … No? Oh dear, madame, that’s an unnecessary gesture.
People generally don’t like to pay tax. Nevertheless, we begrudgingly accept that a central authority gathers money to pay for such socially beneficial things as fire engines, ambulances and an immigration bureau in the only spot in Tokyo that’s not near a train station.
Starting on Oct. 1, Japan’s consumption tax was raised from 8 percent to 10 percent (in some cases) except for food and drink (the definition of food and drink does not include alcoholic beverages) but including prepared food in a restaurant (but not including prepared food bought in a restaurant, but eaten elsewhere) with the proviso that goods paid for through non-cash payments will actually see an effective reduction in the tax rate from 8 percent to 5 percent, due to a rebate for such transactions (sometimes) in some places (time-limited) subject to variability. Clear enough?
I can’t say I am 100 percent certain whether what I have written here is a fair description. I mean, I checked the facts with reliable sources. I just can’t seem to arrange all of the published information into a coherent picture. It’s a little like quantum mechanics. I could tell you what I have read about the uncertainty principle, but I’m never quite sure I have grasped the concept. The more I know how much a hamburger costs, the less I know how to pay for it — and vice versa. Does a dead slab of cow in a bun become a fully taxable hamburger only if it is opened within the restaurant, but not if it is opened outside, and does it exist in both states simultaneously until the packet of teriyaki sauce is opened?
A run on toilet paper
Few people I spoke to before the introduction of the tax changes claimed to know what the deal was. The closest thing to an established fact, judging from the people around me, was that it was absolutely essential to stock up on as much toilet paper as possible. One of my non-Japanese friends went to a store to do just that on Sept. 30, but was put off by a massive queue of like-minded citizens, tottering under piles of toiletries and toilet rolls of their own.
What a bizarre meme! If the apocalypse happens to strike this weekend, Japan may starve. But at least everyone will be immaculately clean till the very end.
Another one of my acquaintances, a Japanese woman in her early 70s, told me that she had made three trips to the shops to buy extra packs of toilet roll just before the tax deadline.
“How much did each pack cost?” I asked.
“I was buying multi-roll packs for about ¥400 each, I think.”
Making a quick calculation, and assuming she could carry two of these bulky items in one trip, she was saving ¥16 per trip. Assuming five minutes to get there, five minutes to get back, and 20 minutes to wait in the bloated queue each time, she put in 90 minute’s work in her three trips to save ¥48. And now she has to store all these toilet rolls in her little apartment.
I think that the psychology at work here is of the FOMO variety (fear of missing out), coupled with a general state of confusion. Specifically, there is a well-researched psychological phenomenon that results in people fearing losing something more than they get pleasure from the thought of gaining something, even if it is of equal value. In other words, it was not the thought of getting all that lovely toilet paper that drove people to buy it. Rather, it was the fear of being left out when everyone else seemed to be gaming the system.
And while other potential purchases were more complicated — should I buy a fridge that I don’t particularly need now to save 2 percent, or will the price of current models come down by more than 2 per cent anyway, if I wait for them to be superceded? — everyone understands toilet rolls. As long as I stay alive, I’ll definitely need them someday.
The problem with cashless
As much as I may seem to be scoffing at an overreaction to a comparatively modest rise in consumption tax (which currently sits at 20 percent in my home country of the U.K.), the reality of the increase actually hit home to me in a coffee shop on Oct. 4.
I have been buying a morning set of coffee and German dog at the Doutor coffee shop chain regularly for years. This has cost ¥390 for as long as I can remember. When I was asked to pay ¥398, dear reader, I think I had heart palpitations — and not just because of all the Doutor hot dogs I’ve been consuming. The world had modestly shifted around me to my detriment, and will never be put back again.
I am as subject to human psychology as everyone else, and what really bothers me about the tax changes is the thought that I am going to lose out as others seem to know something I don’t. That is because of the government’s decision to reward people for non-cash payments with a rebate of up to 5 percent. I can’t see myself ever paying for things with a smartphone. I don’t even own a smartphone. For blind people like me, cash is the way to go in Japan. The invariably clean and crisp Japanese notes are of different sizes so that blind people can easily tell them apart. The ¥100 coins have ridges on the side as a tactile differentiation from the ¥10 coins. I don’t really need to fear being robbed of cash, because I only carry around small amounts.
If my arm is twisted into paying for things electronically, I have to trust that the shop staff are removing the correct amount of money, since I can’t check any displays or print-outs by sight. I have to trust that money will not mysteriously disappear from my account because my data has been compromised.
Blind people are not the only group who might fear losing out in this regard. My Japanese acquaintance in her 70s said that she doesn’t understand cashless payments either. Tourists and immigrants out of the loop may struggle to sign up to such domestic services and end up paying the full whack, too.
Perhaps this land of the rising tax confusion was created more by design than by accident. Previous consumption tax increases have resulted in a short economic boost just before their introduction, followed by a more sustained drop in consumption. This time, things are more expensive on the whole, and tax revenues ought to go up for the government. But with some prices being unchanged — and some even going down — consumer confusion may lessen the impact of the post-introduction consumption slump.
But I can confirm that sales of eat-in coffee and German dogs will be affected in my little corner of western Tokyo. Feel free to join a gaggle of foreign residents, elderly Japanese and blind consumers who will not let ¥8 per week slip away lightly. You’ll see us sipping coffee on the street just outside the store.