Japan increased its consumption tax from five percent to eight percent on April 1, 2014, and it is considering raising the tax to 10 percent in October 2015.

The coming of Abegeddon [By Jiao Haiyang/China.org.cn]

In a press conference held on April 1, Japanese Prime Minister Shinzo Abe said: "In order to sustain Japan's credibility and social security, which increases in cost every year, [the consumption tax increase] will be spent completely on social security and welfare for raising children." Abe hopes the public will understand the government's decision. However, Japanese government debt has exceeded 100 billion yen (US$962 million), of which a major part has been spent on social security, an expense which is considered to be unsustainable.

Yet the increase of the consumption tax has not solved the soaring expenditures on social security and Abe's remark is seen as no different from those of previous cabinets, such as in 1989 when the tax was introduced to balance the system's expenses and revenue. The policy proved less effective because in 1997, the government started to raise the tax rate. Seventeen years have passed, and Japan's debt has tripled. The commitment made by previous prime ministers about the consumption tax has not been fulfilled. The only difference between Abe and his predecessors is that in October 2015, he needs to make a decision about whether or not he will increase the tax rate again.

The spring freeze in the consumption market

In contrast to the two previous consumption tax increases, the increase this time did not cause dramatic market repercussions. In 1989 and 1997, there was a consumption craze, and people took home goods almost a month ahead of the taxation increase. But there was no frenetic shopping right before the tax increase this time. This is partly because Japan is materially abundant and there are few goods which must be purchased before the increase and partly because the Japanese economy has been slowing for 20 consecutive years. Families have to refrain from engaging in shopping sprees due to limited finances. Twenty years ago, almost every university graduate could find a lifetime job in a big corporation, but now 30 percent to 40 percent of Japanese people are temporarily employed, which means they don't have handsome salaries and stable jobs.

Besides, Japanese society has been transforming, and material possessions are no longer a gauge of happiness in life. Instead, simplicity has become the new trend and people are less likely to throng to the shopping centers to buy unnecessary goods only because of a meager tax increase.