Japan may exempt food, drinks from sales tax hike: Report

Japan may exempt some food and beverages from a planned increase in the sales tax.
Japan may exempt some food and beverages from a planned increase in the sales tax. PHOTO: REUTERS

TOKYO (REUTERS) - Japan may exempt some food and beverages from a planned increase in the sales tax, government sources said.

Prime Minister Shinzo Abe's government plans to raise the nationwide sales tax to 10 per cent in 2017 from 8 per cent currently to pay for rising healthcare costs, but many politicians worry about the impact on low-income households.

The government will use a national identity number system it plans to introduce for tax and social security to administer tax rebates on purchases of some food and drinks, the sources said.

The number system is similar to a social security number in the United States.

The Finance Ministry could submit its proposal on the tax rebate as early as next week, the sources said.

An official from the ministry was not immediately available for comment.

The Yomiuri reported on Saturday (Sept 5) that for low-income earners, the rebate could be worth as much as the 2 percentage point increase in the sales tax. The newspaper did not cite the source of its information.

There could be some opposition to offering tax rebates because this would cut tax revenue, the Yomiuri reported.

The Finance Ministry is still uncertain how to administer a tax rebate system of this nature, so there are still a lot of details that need to be worked out, the Yomiuri said.