Sunday, May 31, 2015Sunday, May 31, 2015

Japan shoppers see first sales tax rise in 17 years

Published on Apr 1, 2014 6:11 AM

TOKYO (AFP) - The price of everything from beer and sushi to cars and dishwashers will rise across Japan on Tuesday as shoppers are greeted by the first sales tax rise in 17 years, which has prompted fears of a drop in consumer spending.

Tokyo approved the move to hike the levy from 5.0 per cent to 8.0 per cent as of April 1 in a bid to tame a massive public debt burden. The government is also mulling another rise to 10 per cent, still modest compared some nations' consumption tax.

But the rise has presented a huge challenge for Prime Minister Shinzo Abe since he swept to power in late 2012 on a ticket to nudge the world's number-three economy out of a cycle of falling prices and lacklustre growth with a policy blitz, dubbed Abenomics.

The last time Japan brought in a higher sales levy, in 1997, it was followed by years of deflation and tepid economic growth that defined the country's protracted slump.

A staff of Aeon Co Ltd's supermarket changes a price tag due to a sales tax hike, ahead of the store's opening hours at a supermarket in Chiba, east of Tokyo, on April 1, 2014. -- PHOTO: REUTERS
Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!