Tax Rise to 10% in Japan 2019!How Should We Prepare? | Guidable - Your Guide to a Sustainable, Wellbeing-centred Life in Japan

Tax Rise to 10% in Japan 2019!How Should We Prepare?

By Yae Dec 18, 2018

 

Did you know that the consumption tax will rise from 8% to 10% from October 1st, 2019 next year in Japan? The future raising tax issue still remained uncertain but finally, Prime Minister Abe has announced the raising tax 10% will be determined.

It’s going to be a huge headache for all the people in Japan if tax rises 8% to 10%. If you’re living in Japan, aren’t you curious about how people are going to reconsider their lifestyles according to this tax hike?

Let’s find out what kind of lifestyle changes you should consider in preparation for the 10% rise.

 

1.Why Will the Tax Rise to 10%?

 

 

There are some specific reasons why Japan will raise tax from 8% to 10%. Here are some of the major ones:

・Raised tax will be put towards the national budget for the reconstruction of disaster areas due to heavy rain, typhoon, earthquakes, etc.

・Raised tax will be put towards the national budget aiding social security systems which help in issues such as the fast aging of Japan’s population and declining birthrate.

・Raised tax will be put towards the national budget which supports free preschool, pre-kindergarten, college, system etc. for low-income earners.

Raising the tax price may affect all people in Japan, but it will help and support important areas as well.

 

2.Good News! Not Everything Will Rise

 

 

If like must of us, you are upset about the rising tax to 10%, don’t dispair just yet, this raise comes with some conditions. The following purchases will keep a reduced tax rate of 8% even after October 1st, 2019:

・ Food at the supermarkets such as snacks, sweets, vegetables, meat, fish, fruits, etc.

・ Food you buy “to-go”

・ Subscription to newspapers

・ Soft drinks including water, non-alcohol drinks

・ School lunch or retirement home meals

 

If you cook your food daily at home for your or your family you will save a lot of money on tax after the raise and will not feel the damage as heavily than if you usually eat out all the time.

 

3.What Are the Major Affects for Us?

 

 

So now that we’ve talk about some of the exclusions, what are the major purchases that will see a tax increase to 10%? Here are some inclusions that will most likely affect people in their daily lives:

・ Alcohol such as beer, wine, Japanese sake, sweet sake including sake used for cooking.

・ Food eaten at the restaurants, izakaya, food stands etc.

・ Room service at the hotel

・ Newspapers or books you buy at the bookshops or convenience stores.

・ Property (buying a new house etc.)

・ Pet food

If you spend most of your weekends at izakaya, or stop off at the local restaurant for dinner this consumption tax raise will hit hard on your bill. For instance, if you go out to a restaurant eat and drink a total cost of 5,000 yen, this is how the raised tax will make a difference:

・ 8% tax= 5,000 yen +400 yen (tax) =total 5,400 yen

・ 10% tax= 5,000 yen +500 yen (tax) =total 5,500 yen

If you are thinking that a raise of 100 yen is nothing much, it definitely all adds up! Like the popular proverb in Japan as “many drops make a shower”, the amount you spend will soon creep up on you without realising!

 

4.The Tax is Great Timing to Reconsider Family Finance

 

 

Many of you may feel upset about the tax raising from 8% to 10% next year, but it’s also great timing for everyone reconsider family finances! Maybe we should think about the following things:

Check your cellphone rate plans once again!

Whatever payment plans you’ve signed up for, why not calculate to see if your payment plans are reasonable. Cellphone charges are constant expenses that need to be paid every month so if you can change your plan from 7,000 yen to 3,000 yen, it makes a huge difference throughout the year.

Consider buying your house only if you’re REALLY ready!

Many Japanese people are considering buying their own house before tax raises to 10% next year. If you’re ready to buy your own house without any compromise, now may be great timing for expensive shopping. However, if you have any concerns, it’s best not to rush into it. Since many people are rushing to buy their houses before the raising tax, this may affect real estate prices now and the sales after 10% tax may actually reduce in order for real estate to sell sale cheaper properties.

 

 

 

Hopefully, through this article you all can see the major differences made by raising the from 8% to 10% next year.

There is just under 1 year before the consumption tax raise. It’s now a great timing to reconsider your fixed cost and variable cost once again to get ready for the tax hike.

 

YAE

Japan