Business

'I can barely make ends meet': Low-income families in Japan fret over tax hike

Kyodo

The consumption tax hike to 10 percent Tuesday has left low-income households already struggling to make ends meet worrying about how to cope with the higher cost of living.

To alleviate their burden, the government kept most food and beverages at 8 percent, but higher costs for other everyday items and utility charges are expected to have an impact.

“It’s scary to think that prices have risen for everything aside from food,” said a 43-year-old woman who works part time to help sustain her family.

Her husband and eight children, age 2 to 24, use a large quantity of toilet paper and detergent every day, but such items were not exempted from the tax hike.

Among other measures to minimize the negative impact of the increase, the government is offering low-income households and families with children the chance to buy vouchers for ¥20,000 that allow them to purchase ¥25,000 worth of items.

The number of vouchers people can purchase depends on the number of people in their family, but many say they do not have enough money to buy them and want the benefits paid out directly instead.

“I can barely make ends meet. I have no room for making bulk purchases before the tax hike or buying vouchers,” said a 36-year-old single mother in Ichihara, Chiba Prefecture, who has children in both elementary and junior high school.

A woman in her 40s on welfare said that when her elementary school-age daughter asked for new clothes, she told her they would have to save up by “eating sprouts for a while.”

Although the Tokyo resident hopes to eventually start working, she said, “I think the tax hike will make it harder for me to become financially independent.”

Lawyer Tadashi Inomata of Tax Justice, a citizens’ group calling for a fair tax system, was critical of the intent of increases in the consumption tax.

“Northern European nations have high consumption taxes, but as they also provide high levels of social welfare, most people accept the burden,” he said.

“Japan has given preferential treatment to the strong by lowering the maximum rate of income tax and corporate tax, and it has raised the consumption tax to make up for the loss, and as such is not acceptable to the people,” Inomata said.

Major advertiser Hakuhodo Inc. conducted a survey in March on 2,300 people in their 20s to 60s and found about 70 percent of respondents called the latest tax hike more burdensome than the previous increase in 2014, when it rose from 5 percent.

The percentage was even higher among women in their 20s to 40s, at nearly 80 percent, with many of them citing increased costs for child rearing and education.

Following the 2014 tax hike, the Abe government twice postponed the second round of the two-stage consumption tax increase, originally scheduled for October 2015, due to fears it could dampen consumer spending and hurt the economy.