Business

Japanese government's plan for shopper rebate to underpin tax increase grows increasingly complex

Kyodo

The government’s plan to hand out rebates to consumers who make cashless purchases could consist of two separate rates, sources with knowledge of the plans said Tuesday, raising concerns that the initiative will be confusing for consumers.

Prime Minister Shinzo Abe has said that the government will subsidize 5 percent rebates to people who shop at small businesses and pay by credit card or other cashless methods, a measure aimed at underpinning domestic demand after the consumption tax hike in October next year.

According to the sources, the government is eyeing a 2 percent rebate for cashless purchases at large chains including convenience stores, restaurants and gas stations.

Having two different rebate rates depending on where consumers shop could make the plan more difficult to navigate.

But the government deemed a separate rate is necessary in order to have large chains shoulder some of the cost of implementing the rebates, which are expected to last for around nine months, up to the 2020 Tokyo Olympics.

Chains such as Seven-Eleven consist of both corporate-owned stores and stores that are run by individual franchise owners. Rebates given by franchise owners will be eligible for government subsidies, while those at corporate-owned stores will come out of the company’s pocket.

Abe’s announcement last month that the rate will be 5 percent drew a backlash from some chains, leading to the lower 2 percent rate as a placating gesture.

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