The Consumption Tax Hike in Japan

14 Oct 2019

Japan is well-known for its high cost of living, especially Tokyo. It is annually on the list of the world’s top ten most expensive cities. Although rent in Japan cannot compare with Hong Kong, the general cost of living in Japan, not taking rent into account, is about 10% higher than in Hong Kong. Recently, Japan has increased its consumption tax, which applies to nearly all the goods and services, except most of the food. Still, it adds a burden on households.

Expats who decided to purchase electrical appliances after the arrival may need to consider the additional expense due to the new 10% taxes. In addition, people made their last-minute purchase before the tax imposition causing many major appliances to be sold out. Not only the expenditure on household goods increase but also the transportation fee.

Japan raised its sales tax rate from 8% to 10% due to the swelling national debt and the social welfare programs, accompanied by a variety of measures meant to reduce the impact. One of the measures the government has introduced is a rewards program for cashless payments. Consumers will be eligible for a 2% or 5% rebate on purchases made using electronic payments. This program covers payments by credit cards, debit cards, electronic money, and app-based payment systems, yet, they are limited to Japanese issue cards. Expats who want to get the rewards have to apply for a Japanese issue card first. The easiest way is to get a Japanese e-money card. Most of the convenience stores joined the reward scheme. To be sure, you may check for the cashless banner on the storefront. When you make a cashless purchase in convenience stores with the cashless banner, the 2% rebate is instantly deducted from the transaction.

The cost of living in Japan has maintained a relatively high level for years, and the tax imposition even increases burdens on households. Expats who are going to live in Japan may need to plan wisely for the expense.