Japanese rush to beat hike in sales tax
JAPAN is bracing itself for its first sales-tax rise in years, with last-minute shoppers buying up a host of goods, from gold to ice cream, as the government tries to tackle its crushing national debt.
Millions of shoppers made a mad dash to stores ahead of today's tax rise to 8 per cent, from the current 5 per cent, amid fears the increase could spark the return of a protracted economic slump.
The last time Japan brought in a higher levy in 1997, it was followed by years of deflation and tepid economic growth.
The tax rise - a seemingly modest increase compared with many countries' consumption levies - has ushered in some less-than-typical shopping habits.
Staff at jewellery chain Tanaka Kikinzoku watched wide-eyed as gold sales surged five-fold last month from a year ago, with customers converging on a shop in Tokyo's glitzy Ginza district so they could buy 500g bars for 2.3 million yen (S$28,000) apiece.
"We've seen unusual demand for gold," Ms Tomoko Ishibashi, a spokesman for parent company Tanaka Holdings, said. "Some customers bought now to avoid the extra tax levy from April 1, but that's not the only factor."
With prices on the rise across the nation of 128 million, some gold-hungry customers may be betting on the perceived safety of the yellow metal, she said.
"Gold is known for its price stability and people in general aim to hold it for a long period of time," the spokesman added.
While some firms are absorbing the higher tax, fearing a drop in customer traffic, many others are raising prices as a sharply weaker yen jacked up their import costs.
Beverage giants Asahi and Suntory are raising the price of vending-machine bottled drinks, while QB House, a 1,000-yen-a-head haircut chain, said prices will go up a full 8 per cent, to 1,080 yen. The company reasoned that it kept its thrifty rate capped despite the last tax rise, when the levy rose to 5 per cent from 3 per cent.
The kids - and adults - who depend on Japan's ubiquitous vending machines for their ice cream fix are sure to be disappointed, as some of the sweet treats' prices rise by 10 to 160 yen at 20,000 locations operated by Ezaki Glico.
But the confectioner insisted that customers will not be short-changed. "This is not just a price hike," a company spokesman said. "We will update our products with higher quality or more volume."