For many small and midsize companies, the twofold hike in the consumption tax could spell doom, if they may find it difficult to completely incorporate the tax burden into the prices of their products and services, analysts say.
This will be particularly true for small manufacturers such as parts makers, they say, because the higher tax will push their operating costs higher, but their business partners — large manufacturers — might also be operating at the brink after cutting costs as much as possible to survive the economic downturn in recent years.
The fear of having their contracts canceled could also make the smaller manufacturers hesitant to raise product prices, and experts warn that the tax hikes may lead to more bankruptcies among small enterprises.