Japan Press Weekly

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2019 May 8 - 14 [ECONOMY]

Half of small businesses fear possibility of sales slump due to consumption tax hike

A small business research institute, which is affiliated with the All-Japan Commerce and Industry Organization Association (Zenshoren), has released results of its survey on small- and medium-sized businesses showing that nearly half of the respondents think that their sales will most likely decrease due to the planned consumption tax hike to 10%.

Zenshoren organizes small business operators across Japan in a wide range of industries, including the construction, retail, and service industries. The think tank conducts the survey of Zenshoren members on their business outlooks twice a year.

In the latest survey, the respondents answered a question on how they anticipate their businesses will be affected when the consumption tax rate is raised to 10% in October.

Around 40-50% of the respondents said that they anticipate their sales will go down. Other answers included “profits will decrease” and “it will be necessary to consider giving up their business”. The percentage of the “lower sales” answer was 44.8% among businesses with annual sales of less than 10 million yen, 50.0% among those with sales of 20-30 million yen, and 40.0% among those of more than 100 million yen. The percentages of business owners “considering giving up” were 9.9%, 9.1%, and 0%, respectively.

In the comment section, a hotel operator in Shimane Prefecture wrote, “The consumption tax hike to 10% will result in higher room charges and drive guests away. The same thing happened when the tax rate was increased to the current 8% several years ago.” The operator added that business prospects will be gloomy for a while. Regarding the government’s plan to introduce a multiple consumption tax rate system in October as a measure to avoid negative impacts from the sale tax hike, a grocery store owner in Miyazaki Prefecture said that the system will make it difficult to keep books and impose added burdens on the owner.

The Zenshoren think tank said that the consumption tax hike in October will leave long-lasting damage on the Japanese economy and expressed concern that the introduction of multiple tax rates will create a mountain of paperwork and chaotic situations for business owners. The institute stated that in order to prevent a devastating damage to the Japanese economy and small- and medium-sized companies in particular, which play a major role in local economies, the government should cancel the tax hike plan.

Past related articles:
> 100K pple nationwide rally to oppose heavy tax burdens [March 14, 2019]
> Taxpayers opposing further consumption tax hike hold nationwide day of action [March 12, 2016]