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Gaps in effects of consumption tax hike on consumers

  • 2015-03-24 15:00:00
  • , Asahi
  • Translation

(Asahi: March 24, 2015 – p. 4)

 

 As a result of the consumption tax hike from 5% to 8% in 2014, the degree of regressiveness, which refers to a heavier tax burden on households with low incomes, has grown. This was proven by a survey conducted by the Japanese Consumers’ Co-operative Union (JCCUN). The JCCUN said households with low incomes spent a higher proportion of their incomes due to the consumption tax hike.

 

 The JCCUN analyzed the household accounts kept by 608 households across the nation and calculated the amount of money spent on consumption tax in 2014. The average amount of money spent by the 608 households was about 241,000 yen, up by about 74,000 yen from the previous year before the consumption tax hike. The amount of money spent on consumption tax paid accounted for 3.6 percent of income, up 2.46 percent from 2013. The money spent by households with an income of less than 4 million yen was about 166,000 yen. This burden accounted for 5.44 percent of their incomes, up by 1.96 points from a year earlier. The burden for households with an income of over 10 million yen was relatively low at 2.94 percent, up by 1.02 points from the previous year. The burden for households with an income of less than 4 million yen was 1.85 times higher than households with an income of more than 10 million yen.

 

 The trend in which spending increased after the consumption tax hike was seen among households with an income of less than 4 million yen. The JCCUN analyzed that “since it was difficult for households with low incomes to cut necessary expenditures, they were directly affected by tax and price increases.

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