Jul 3, 2025
Consumption tax cut chatter
We're all experiencing it right now, and it's a topic that has been discussed here on City-Cost quite a bit of late -- the prices of many things have been going up, but salaries aren't moving at the same rate. A lot of households are pretty under the pump right now when it comes to paying their bills and affording groceries, and it's requiring some different thinking about how to alleviate it.
If you keep an eye on the news, you may have already seen the talks about cutting the consumption tax becoming a major election issue. The Upper House elections are coming up on July 20th, with several opposition parties suggesting slashing the tax to provide a bit of relief.
Lowering the consumption tax, or scrapping it altogether have been some of the proposed suggestions by opposition parties.
The Constitutional Democratic Party of Japan (the largest opposition party) wants to make food nontaxable for a year and offer a ¥20,000 handout. Another suggestion from the Democratic Party for the People involves cutting the consumption tax to 5% until wages start to catch up, and some smaller parties even want to scrap the tax altogether.
The LDP on the other hand is holding firm, with PM Ishiba saying that the tax is needed to fund social welfare costs. Instead, their suggestion involves quicker relief in the form of ¥20,000 payments to every resident, since they can be rolled out faster than a tax change can.
I can definitely see the appeal of both tax cuts and cash handouts, since a tax cut on groceries could immediately help out with supermarket bills, and cash handouts could help to offset the cost of utilities or rent. In saying that, there's also concern from economists that slashing the tax could spook markets and threaten the country's long-term financial health, which would end up with other negative impacts down the road.
I'm certainly not an economist (just a mother trying to keep on budget for her family!) but I hope that there's a way to balance both helping people in the here and now without making things worse later on.
Do you have any thoughts on what you'd rather when it comes to consumption tax cuts, cash handouts, or maybe another idea that hasn't been suggested by any of the political parties?
1 Comment
TonetoEdo
on Jul 3
The proposals first made the news in April this year. I mentioned in a blog post how I spent the flash benefit issued in 2009 on gardening supplies - https://www.city-cost.com/blogs/TonetoEdo/G6AnD-shopping_money Math ain't my strong suit, but I'm no dummy. A 20,000 yen handout is easy to implement. One and done. For a household of five, it's 100,000 yen. People in a pinch will spend it while the rest will save it. My guess is that reducing or eliminating the consumption tax on food will make the most impact. I'm single and once or twice a month shop for my neighbor, which runs about 30,000-40,000 yen a month. I estimate the consumption tax is around 35,000-40,000 yen a year. Gimme a break on that and I'll hurt less at the cash register.