Japan Hikes Consumption Tax To 8%

Above, a Kumamoto bakery. Baked goods, like everything else, now costs more. Photo by Armand Vaquer.

Japan has raised its consumption tax today (it is April 1 there) from 5% to 8%, which amounts to a tax hike of roughly 60%.

Japan Today reports:

TOKYO —The price of everything from beer and sushi to cars and dishwashers increased across Japan Tuesday as shoppers were greeted by the first sales tax rise in 17 years, which has prompted fears of a drop in consumer spending. 

The government is hiking the levy from 5% to 8% as of April 1 in a bid to tame a massive public debt burden. The government is also mulling another rise to 10%, still modest compared some nations’ consumption tax. 

A key worry is that Japan’s last tax rise deterred spending and foreshadowed the drop into years of deflation—although other factors, including the Asian financial crisis, were also blamed.

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