Consumption Tax Rate Upped to 8%! What is the impact?

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~ Reporters Roundtable ~

Reporter A: Prime Minister Abe finally decided to raise the consumption tax rate starting next April. Although it was becoming rather a predetermined policy, it is now official.  The consumption tax rate will be increased to 8 percent next spring.

Reporter B: At the press conference, Prime Minister Abe spoke about achieving a balance between economic growth and fiscal health. In terms of fiscal health, there seem to be more than a few voices who support the decision. Concurrently, the prime minister also presented economic measures, such as corporate tax reduction plans, but what concerns us most is how this is going to affect small and medium-sized retailers.

Reporter C: Some business owners are concerned about price pass-through forced by the tax increase, while others are worried about negative sales declines following last-minute demands. After the tax rate was increased from 3 percent to 5 percent in 1997, there was an increasing trend in the number of retailers filing bankruptcy that lasted a while. That number is also on the increase for the current fiscal year. Now, with a 3 percent increase, I’m concerned how great the impact will be.

Reporter B: The number of supermarkets going out of business stays at the same level as in the previous year and as expected, the trend is more prominent in rural areas.

Reporter A: Among the small to medium-sized supermarkets that are faced with difficult circumstances due to newly emerged shopping centers and major GMS in their areas, some are now regarded as financially unstable. The impact of the consumption tax increase on them may need to be taken into consideration.

Publishing and Printing Continue to Face Tough Times > > >  

Reporter C: This is hardly new, but printing companies are under difficult circumstances due to the declining publishing industry, depreciation of the yen, and soaring paper prices.

Reporter B: It’s true that the publishing industry is also going through some tough times. According to “Advertising Expenditures in Japan” reported by Dentsu, magazine advertisement expenditures in 2012 increased for the first time in 12 years, but both magazine sales and the number of magazine copies sold went down.

Reporter A: Anyway, the publishing industry does not seem to be so willing when it comes to disclosing operating results. A reviewer of a company that deals with a certain publisher was complaining about the industry, describing it as “not so transparent.”

Reporter D: Any industry has its own rules and customs, but transparency leads to trust. In order to gain trust of your business partners, appropriate information disclosure is an important factor.

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