Japan will increase its national sales tax by 3 percent
Share Now on:
Japan’s Prime Minister Shinzo Abe announced a sharp increase to the country’s national sales tax, from 5 percent to 8 percent, in an effort to curb its high debt. The change would go into effect next year.
The BBC’s Rupert Wingfield-Hayes says Japan’s population is aging very rapidly, and that is a driving force behind the tax hike. Japan has the largest public debt in the developed world.
“Taxes currently only cover about half of government spending every year,” says Wingfield-Hayes. “So something has got to be done to try and get Japan’s public finances back in order.”
He says the huge risk with this decision is that Japan’s younger shoppers will stop spending, especially on big ticket items — which could cause a drag on consumer spending.
The BBC’s Rupert Wingfield-Hayes joins Marketplace’s Mark Garrison from Japan to discuss. Click on the audio player above to hear more.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.