Business

Japan's consumers and workers struggle to adjust on first day of consumption tax hike

Kyodo

With the consumption tax rate rising from 8 percent to 10 percent Tuesday but with different rates for food and other daily items, consumers and store workers struggled to adjust.

Under a system intended to lighten the burden on low income households, tax rates for foods vary depending on where items are consumed. A meal eaten in a shop or restaurant is now taxed at 10 percent, but the rate remains at the previous 8 percent for takeout food.

“Since today is the first day, I became nervous trying to avoid making mistakes at the cash register,” said Yumiko Hasegawa, a 67-year-old part-time worker at a Mos Burger outlet in Kawasaki.

“It would be much easier if the tax rates were the same,” she said.

Workers at a Yoshinoya beef-bowl restaurant in front of a train station in Kawasaki put up a notice at the entrance informing customers of the differing tax rates.

At a Lawson convenience store in Shinagawa Ward, Tokyo, a 29-year-old male company employee chose to take out his purchase of rice balls and tea rather than consume them on the premises.

“I decided to take them away with me so as to pay less,” he said.

Some retailers increased prices at the same time as the tax hike.

Sachiko Sakai, 72, who runs a deli in the Sunamachi Ginza shopping mall in Koto Ward, Tokyo, added ¥50 to the price of one of her flagship offerings, a set of 10 jumbo shūmai dumplings, bringing the total to ¥750.

“I’d like to keep the price low, but costs of containers have been rising,” she said. “Why should the tax rate be raised now, when I’m having a hard time managing the store?”

At a supermarket in Koto Ward, a female shopper in her 70s said that “the tax hike is a burden for people living on pensions.” She added that reward points programs for cashless payments do not benefit her because she pays with cash.

By taking advantage of such programs, customers that use credit cards or other cashless payment methods can receive points with rebate rates of up to 5 percent until the end of next June.

A 22-year-old university student from Hiroshima Prefecture felt the effects of the tax hike immediately after the clock struck midnight Monday.

“I should have shopped a little earlier,” he said after buying cigarettes at a convenience store in Minato Ward, Tokyo. “I felt like I’d been ripped off.”

Shohei Sakai, 33, who purchased bread and water at a convenience store in Shinagawa Ward as a late-night snack, said he was relieved that the tax rate on food had not been raised.

“Probably I should switch to cashless payments from now on,” he said.

Restaurants and stores across the country were scrambling to adjust to the new tax rate last night, with a number of them failing to update their systems in time and some making mistakes in pricing their items.

At Saga Tamaya, a department store in southwestern Japan, customers will not be able to receive reward points for cashless payments until around November due to delays in preparations, the store said.

Major convenience store chain operator Ministop Co. said items with a 10 percent tax rate were sold at an 8 percent rate between midnight and 3 a.m. at several hundred of its 2,000 outlets nationwide.

The operator believes this was caused by a glitch in the cash register system, and said the company may have to shoulder the difference.