How has your life changed for a year since the consumption tax hike?

October 2, 17:53

It's been a year since the consumption tax rate was raised from 8% to 10% last October.

Cashless payment points are returned to the reduced tax rate.

The first initiative was introduced as a set and became a big topic, but what kind of change has it brought to our lives after a year?

(Ministry of Economic Affairs reporter Toshiki Arai Satomi Mogi)

Are you too sensitive?

"Japanese consumers are more sensitive to raising the consumption tax rate than in other countries." --- This is a word I've heard several times in the two months since I was in charge of the Ministry of Finance.

Looking back, it can be seen from GDP and gross domestic product that every time the consumption tax rate is raised, the movement of life defense spreads to consumers and the economy cools down.

On the way to recovery ...

Even with the consumption tax hike a year ago, consumption is still depressed.

However, there was also a view that it was likely to recover relatively quickly due to measures such as returning points for cashless payments.

I also heard from people in the retail industry that consumption has returned faster than the conventional consumption tax hike. It has gradually recovered from the beginning of the year.

It was the spread of the new coronavirus that crushed the expectation that the Japanese economy would become even more vibrant toward the Tokyo Olympics and Paralympics in the summer.

The impact covered the Japanese economy like a thick cloud, making it difficult to see just the impact of the consumption tax.

Changes in consumer consciousness?

However, now that the consumption tax hike has been affected by the new Corona, there is a growing view in the retail industry that consumers are becoming more “saving-minded”.

Seiyu, a major supermarket, was the first to respond.

In early September, we decided to reduce the prices of 765 items such as food and daily necessities.

Sales of the main items that have been reduced are about 20% higher than the same period last year.

This is the first major price cut since October last year when the consumption tax rate was raised.

It is said that while the current performance is favorable due to the effect of "consumption of nesting", he dared to cut the price.

Toru Araki

"The saving consciousness that became very strong in October last year weakened once, but it became even stronger due to the corona sickness. I feel that consumers are becoming more anxious about their income."

This is not the only major price cut.

In September, Cainz, a major home improvement store, cut prices on 7,200 items in a wide range of fields, from comforters to copy paper.

For MUJI, we are gradually reducing the prices of more than 70 items of autumn / winter clothing.

For food and daily necessities, we've heard a lot of news about price increases over the last few years due to rising labor costs, but the trend may be about to change.

However, consumer awareness may not always be "conservation-oriented."

In this interview as well, some people said, "I'm looking forward to shopping while going out is restricted, so I'm not saving money."

“Nesting consumption”, which sells products that you can enjoy at home, is booming, and it is said that the purchase price of second-hand goods has risen to a record high at a luxury watch store against the backdrop of rising demand.

A government official who analyzes the domestic economic situation said, "If we are going to return to deflation, the footsteps are still far away. However, if the stagnation of consumption due to corona is prolonged, we must be cautious."

The Minister for Economic Revitalization Nishimura, who is the command tower for economic measures, occasionally said, "We will work with the determination to never return to the situation of deflation," supporting consumption and turning to deflation in the opposite direction. It shows the attitude to stop.

Scenery change

In the past year, you can clearly feel the change in the "eat-in" corner where you can eat and drink in stores such as convenience stores.

The tax rate for food and beverages excluding alcoholic beverages is reduced by 8%, while it is 10% for eat-in, which is considered to be eating out.

According to a survey conducted by research firm NPD Japan, sales of eat-ins at convenience stores and supermarkets increased by more than 20% compared to the previous year during the three months from July to September last year, just before the tax increase. However, it decreased by 8% at a stretch during the three months from October to December.

Furthermore, during the three months from April, the spread of the new coronavirus caused the eat-in space to shrink and close one after another, dropping to minus 45%.

Until then, convenience stores and food supermarkets had been pursuing a strategy of grabbing fixed customers by making eat-ins like "meeting houses" for nearby residents.

At Lawson's store, which has a pharmacy in Tokyo, gymnastics classes have been opened to revitalize the store.

However, since April, the number of seats has been reduced to just three, and the event has been forced to suspend.

A female customer who visited the store said, "It was a busy and fun place, but now I'm lonely."

I want to somehow bring the store and the area back to life --- At this store, we will thoroughly disinfect from October and restart the event with a limited number of participants.

Daisaku Kaneko

"Eat-in was also the reason for visiting the convenience store, so I would like to restart while paying attention to infection."

What is the essential social security?

In the first place, the increase in sales due to the increase in the consumption tax rate will be used to enhance social security.

Aiming to shift to "all generations of social security," it will be used for early childhood education and free childcare.

Consumption tax has been regarded as a stable source of revenue because the fluctuation of tax revenue due to the economy is smaller than that of income tax and corporate tax.

However, due to the impact of the new coronavirus, consumption, which is the source of tax revenue, suffered a record decline mainly in travel and eating out, so there are concerns about the impact on tax revenue.

Due to the effects of the new coronavirus, many families are struggling to live and many companies are suffering from poor business performance.

On the other hand, in the midst of difficult financial resources, it is expected that at the end of this year, a conclusion will be reached on a concrete mechanism to raise the burden on hospitals for people aged 75 and over to a certain level or higher.

How to cover the ever-increasing social security costs while revitalizing the economy, which is the source of tax revenue, is a difficult task for the Kanshin administration, which was launched a year before the consumption tax hike.

Reporter of the Ministry of Economic Affairs

Toshiki Arai

Joined the

Bureau in

2005

After working at the Kitami Bureau and Sapporo Bureau, he is

currently in charge of interviewing the Ministry of Finance.

Satomi Motegi, a

reporter of the Ministry of Economic Affairs

, joined NHK after working as an editor of a free paper.

After working at Saitama Bureau and Morioka Bureau, from 2017, Ministry of Economic Affairs