Consumption Tax Hike Will Have a “Negative Impact,” Say 55.3% of Survey Participants

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~ The most sought-after solutions include “Modify core systems,” “Gather information and develop an understanding of transitional measures” and “Develop agreements with business partners” ~

Introduction

On August 10, 2012, the bills on the Comprehensive Reform of Social Security and Tax were passed based on the three-party agreement reached by the Democratic Party of Japan, the Liberal Democratic Party and the Komei Party. One of these bills spells out a plan to increase a type of sales tax, called the “consumption tax” in Japan, to 8% in April 2014 and 10% in October 2015. However, the current administration has stated that it will make a final decision on the implementation of the passed legislation in or around this October, in consideration of the discussions of the Council of Advisors, which was established to examine the effects of a consumption tax increase, as well as through reviews of the GDP growth rate and other economic statistics. Under such circumstances, there is a growing concern about the impact the consumption tax hike could have on consumer spending, capital investment trends and corporate performance.

Given such a background, Teikoku Databank (TDB) has conducted a survey on how businesses view the anticipated increase in the consumption tax. This survey was conducted concurrently with TDB’s economic trend survey for August 2013…Read Full Texts

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