For the first time since the consumption tax rate was hiked to 8 percent from the previous 5 beginning April 1, Japanese Prime Minister Shinzo Abe was seen shopping at an upscale department store in Tokyo last Saturday. His shopping trip is seen as a move to show people that the higher taxes shouldn’t stop them from spending, as the increase is needed to bring the country out of decades of deflation.
Abe went to the Nihonbashi Mitsukoshi department store where he spent an hour shopping. His purchases included six books worth ¥8,000, a pair of shoes, yogurt and retort curry. He spent almost ¥40,000, of which, ¥2,958 was counted as consumption tax. Speaking to reporters after, Abe said he went shopping to experience firsthand the effect of the tax hike to consumer spending. “I realize the consumption tax rate is considerably higher than 3 percent [the rate when the consumption tax was first imposed],” he said.
Some department stores have already reported a decline in revenue a few days after the increase was implemented. Many have seen a decrease of around 10-20 percent in sales. However, demand for food items remain the same. Abe added that “the hike is necessary to cope with ever-increasing social security expense and provide child-rearing support.” He told reporters after that the increase would be used to improve the nation’s social security finances. “I have a renewed sense of responsibility to utilize the revenue for social security programs,” Abe commented.
[via The Japan News]
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