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Have you been shopping? March 31st, 2014 | Author: David

Have you been shopping?

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As you all know, consumption tax will go up tomorrow from 5% to 8%. I read a story this morning about how everyone was out shopping at the weekend in a rush to stock up.<!–more–>

Speaking from my own experience, I was in the new Costco in Tokoname twice last week because I needed to buy a lot of things for my new house, and it was absolutely packed on both days. The first time was a Sunday, so I wasn’t too surprised, but the second time was a weekday. I asked one of the staff if they were always so busy, and he said that it was particularly crowded because of the tax rise, so I guess the news story was true, at least for Costco.

As you probably know, Japan’s sales tax is really low compared to other countries. In Britain, for example, it is 20%, although you don’t have to pay it on essentials like food and children’s clothes.

The problem in Japan is that people are struggling with rising prices and static salaries. The last time the tax was raised from 3% to 5%, it led to an economic slump that lasted for years, and many people (including me) think that the same thing will happen again.

Mind you, I have heard a lot of people say that the tax increase might actually cause prices to fall as retailers will be forced to cut their prices in order to attract shoppers. Let’s hope that is what happens.

I know we have discussed this topic before, but what I would like to know this week is whether you have been out shopping because of the tax rise. Has anyone bought a “big-ticket” item like furniture, household appliances, or a car? If not, have you been stocking up on cheaper items?

Look forward to hearing your thoughts.

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Comments

  1. Akira
    Commented on
    2014/03/31 at 4:33

    I haven’t been shopping because I haven’t got any expensive stuffs that I need to afford right now and I might be wrong but I think it makes just little difference to your budget even if you stock up on any cheaper things before tax rising.
    The other day, btw, my mum told me that a lot of people had been queueing up at a petrol station.

  2. YU
    Commented on
    2014/03/31 at 4:52

    Hi David and everyone,

    I doubt if buying high-priced items just before the tax rise is always sensible too. For example, I’ve heard that condo prices experienced a big drop just after the last tax rise.

    I went grocery shopping yesterday. Actually, I wanted to buy some toilet paper, but the cheapest one I usually buy was sold out and only high-grade ones were left, so I didn’t buy anything because I thought I’d be able to get my usual one a couple of days later anyway. Some people seemed to stock up on more expensive ones than they usually use, but it’s not an oil shock. The sight reminded me a bit of the time just after the quake. Anyway, I just wonder why they like to spend more money than usual. They came to buy things to save money, but they just wasted money.

  3. Tsuneko
    Commented on
    2014/03/31 at 10:26

    Hi David and everyone,

    I haven’t been shopping or stocking up anything. People around me also don’t seem to have been doing so. I go to nearby wet markets or ‘ichiba’ almost every day, so I don’ t buy a lot at once. Also, no space for that:)

  4. Biwa
    Commented on
    2014/04/01 at 9:16

    Hi everyone,

    I haven’t been shopping, either, except for my sons’ commuter tickets(通学定期). It said in the newspaper yesterday that the 3% rise will be roughly 50,000 yen more pay/person/year. Learning that, I felt like buying the whole supermarket or department store! 3% is only 300 yen even when you buy something 10,000 yen, so it doesn’t feel like a big difference, but it makes me mad to know it’s going to add up to 50,000 yen in a year. Things are going to turn out just as Mr. Abe has wished, and that makes me mad, too!

  5. Anne
    Commented on
    2014/04/01 at 9:27

    Hi David and everyone,

    I saw some people stocked up some daily items like toilet paper and water when I went to a supermarket near my house this last Sunday. It was packed with people. I haven’t been stocking up anything but bought them that my family needed. I guess the amount of expenditure for daily items in my house doesn’t change when I give up buying chocolates or a package of ice cream:) As for “big-ticket” item, my husband and I bought a car last December, but it’s not because of the tax hike but for Shaken(Japanese Car Inspection) which took place this February.

  6. Kattie
    Commented on
    2014/04/01 at 9:40

    HI everyone,

    As a side issue, I am not a big fan of indirect taxation e.g. consumption tax because the tax burden falls disproportionately on the poor, it also means that more people avoid tax altogether by dealing on the black market.

  7. YU
    Commented on
    2014/04/01 at 10:40

    I don’t really think Abenomics is going as well as it was planned. Major companies raised the wage base all together a couple of weeks ago, but even that seemed to be done under compulsion from the government(!), so it’s very natural that people still feel unsure about the future and try every possible means to save 3%.

    The government says that they’re considering whether they will introduce a reduced tax rate on essentials at the next tax increase planned exactly a year from today, but I suspect it would cause a big argument and start before it is fully considered from every angle.

  8. Fumie
    Commented on
    2014/04/01 at 11:27

    Hi David and everyone,

    The topic is what I assumed David would choose.
    I didn’t try to stock up so many stuff before the tax rise because I thought the prices of some goods were more expensive than usual. For example, the lowest price of a 12-rolls pack of toilet papers used to be 198 yen but before tax rise, they were more expensive than that and I guessed that stores raised the price because customers would buy them anyway.
    I went to a local supermarket yesterday morning, and there were so many people and they were queuing holding baskets filled with full of stuff.
    I don’t think buying all the goods before the hike is economical, some commodities would be cheaper after the hike but in case of expensive goods it’s economical. My husband made a contract to install solar panels before tax rise although the construction will start from April.

  9. Biwa
    Commented on
    2014/04/02 at 9:35

    Hi everyone,

    Maybe I should have said “Things are being ‘introduced’ just as Mr. Abe has wished even though the results are going to be very unfair to people, especially the younger and working generation.”

    For example, many of the retired people in our neighborhood look very wealthy to me. They often go on trips, sometimes abroad. However, we haven’t done any family trips for years simply because we can’t afford it. I understand that they have worked hard, and they deserve such a happy retired life, but what happens to us? I can’t really imagine us(our generation) doing that in the future. If our salaries don’t rise, we won’t be able to save. I can’t help thinking that we’re just being robbed from in order to pay the older generation. Younger people must feel even worse.

  10. David
    Commented on
    2014/04/02 at 10:21

    Hi Biwa,

    “I can’t help thinking that we’re just being robbed from in order to pay the older generation.”

    That is pretty much exactly what is happening. The older generation grew up paying little or no consumption tax, and the government spent all its money on construction projects and “amakudari-funding” schemes. Now that generation is no longer earning, and they need welfare and health care, so they are simply taking the money they need from the younger generations through tax.

  11. YU
    Commented on
    2014/04/02 at 2:11

    I agree with Biwa and David that tax we’re currently paying is used mostly for the older generation and we benefit almost nothing. Now the working generation is poor, but I don’t think it’s sensible to put all the blame on them, I think the then government was too reckless and optimistic about the future. Of course, people were stupid too, though. The then politicians are all dead now and you can blame only on the then younger generation(=the current older generation).
    Anyway, it’s not a good idea to leave the current situation that the younger generation hates the older generation, but I don’t think the government would do something nice for us because they’re afraid of being ignored by older people.

  12. Biwa
    Commented on
    2014/04/03 at 7:27

    Hi everyone,

    It’s not that I hate the older generation, I just hate the current government/system. If we can feel secure about our future, I think people would willingly pay the tax. However, it seems that we’re going to benefit much less than the current eligible people, and the situation is even worse for younger people. It’s really unfair that people with more burden benefit less. I know there’s no easy answer to this issue, but I just think that the older generation has to share more of the burden. And then, the same old argument as we have done before; we need more younger people’s voice in the government which means we need more younger people to vote!

  13. YU
    Commented on
    2014/04/03 at 9:35

    Hi Biwa and everyone,

    I know you just hate the current government/system. Actually, I meant to say the same thing, too. Sorry for my poor Englsih. As I wrote, “it’s not a good idea to leave the current situation that the younger generation hates the older generation”. I wanted to say “若者とお年寄りの関係がギクシャクするような今の状況を放置するのは良くない”, but I just didn’t know how to say it. Maybe I should have used “envy” instead of “hate”?

    By the way, I agree with you that there’s no easy answer to this issue. If I were a pensioner and received much less pension than I paid and the then government promised, I’d be mad. Past stupid politicians don’t need to take the blame for their leckless plans at all because they’re all dead. I know there’s no help for it now, but I just think older people must find it unfair because they grew up paying little or no consumption tax just because it was what the government had decided.

  14. David
    Commented on
    2014/04/03 at 11:52

    Hi Biwa,

    You are definitely right about the need for young people to vote, but the problem is that even if they did, there are far more old people in Japan now than young people, so I’m afraid government policies are going to be skewed in their favour whatever happens.

  15. David
    Commented on
    2014/04/03 at 11:53

    By the way, did everyone notice how much gasoline has gone up this week? I read somewhere that the government has raised the tax on that as well!

  16. Biwa
    Commented on
    2014/04/04 at 7:41

    Hi YU,

    Please don’t say sorry, I know my English doesn’t convey my intentions perfectly, either. I just wanted to make sure that I don’t hate older people, since some of the readers might be older than me.

    Hi David,

    You are absolutely right. Maybe we might need to set an age limit for voting to balance the voice of the young and elderly e.g. people older than a certain age lose their right to vote(?!!) Of course, this is unlikely to happen because it’s not democracy after all.

    Hi everyone,

    I don’t have a car, so I haven’t noticed the gasoline tax(環境税) besides the 3% rise, but I learned yesterday that Starbucks charges 108 yen for a refill. It’s funny because it used to be 100 yen, not 105 yen. Is this a “me-too” price-raising?

  17. YU
    Commented on
    2014/04/04 at 1:47

    Hi David,

    I heard about the tax on March 31. I saw people queuing at the gas station to buy gasoline on TV, but even if I had known about it, I don’t think I would have lined up because it would make only a couple of hundreds yen difference at most and it’s only once.

    Hi Biwa,

    I heard in a TV news that a very famous coffee shop chain raised the price of their main menu from 200yen to 220yen at once. When I heard the original price of 200yen, I thought that they must have meant about “doutor”. 20yen=10% of the original price! If I have to pay 220yen for a cup of drip coffee at dotour, I will choose to pay 300 yen at Starbucks and get a refill.