Japan’s Sales Tax Retail Rush

More and more studies are coming out that indicate that sales tax does affect shopping habits, including last week’s Ohio study about Amazon, sales figures, and sales tax avoidance. Japan is proving that this isn’t limited to the United States. April brought a steep rise in sales tax across Japan. It’s been a long-planned and discussed change by Japan’s new leadership. What’s most interesting, however, is the effect the sales tax climb had on sales in March. It’s been 17 years since Japan has seen so much growth in one month. March retail sales were up by annually and the last time Japan saw this kind of growth was in 1997. It’s no coincidence that 1997 was the last significant increase in sales tax.

But the Bank of Japan has learned from experience and April is going as expected. Although people stocked up on items in March, including big ticket purchases, overall the Bank of Japan expects things will go back to normal in a short period of time. The United States can learn a few lessons from Japan about national sales tax and how it affects consumer behavior. National sales tax laws make sales tax easier to understand for the general consumer so they pay closer attention to changes. Most residents of states couldn’t tell you when sales tax was being raised in their area or what certain items were taxed at, especially in areas where sales tax code is extremely complex. Japan’s sales tax, on the other hand, is much easier to understand. The tax hike in Japan isn’t a half-cent tax, like many change in the United States. Instead, the sales tax hike increased the rate from 4% with a 1% local tax, for a total of 5%, to 8% total.

In October of 2015, the tax will increase another 2% to bring the total sales tax to 10%. It very well might be that significant changes where sales tax is doubled have a much broader effect on consumer behavior than small incremental increases over shorter periods of time. In the end, there’s really no denying it. Sales tax does affect consumer behavior and there’s plenty of evidence to prove that.

Latest Articles

Sales Tax Software

Sales Tax Software

Sales tax calculations and filing can be done by hand. When you make a sale, you figure out whether the goods and services are taxable and whether you have nexus in the buyer's tax jurisdiction. More on that later. Once you've determined that you need...

read more
Customer Service and Your Sales Tax Solution

Customer Service and Your Sales Tax Solution

Sales tax is complicated. We've just gone through the annual flurry of back to school tax holidays, for example. If you're a remote seller of clothing, you probably sell mostly through retail. But you might have some direct to consumer sales. In some...

read more
Sales Tax Holidays for E-commerce

Sales Tax Holidays for E-commerce

A lot of our clients are manufacturers, contractors, or in some other industry that doesn't usually have to think much about sales tax. Retailers know they have to collect sales tax, and usually plan for it. We often hear from people who had no idea...

read more