From: tvp@gibdo.engr.washington.edu
Newsgroups: soc.culture.japan
Subject: Re: Try it again - RE: Please give me your opinions...
Date: 18 Nov 92 20:49:49 GMT
Article-I.D.: u.1992Nov18.204949.25465
Distribution: na
Organization: clearer than blir

In article <1992Nov18.164057.2972@island.COM> fester@island.COM (Mike Fester) writes:
>In article <1992Nov17.093006.6389@u.washington.edu> tvp@gibdo.engr.washington.edu writes:
>
>Couple follow-ups to the follow-ups.
>
>>1. Sales tax in Japan is 3% but what the Japanese gov't hides is that
>>   this tax is applied at every market layer. I.e. the maker charges
>>   the wholesaler 3%, the wholesaler charges the retailer 3%, the
>>   retailer charges the customer ("end user") 3%. The full cost of
>>   this tax is of course being passed along to the consumer and the
>>   net effect is a tax closer to 8-9% on average. (The shouhizei was
>>   intentionally set up this way, to appear lower to consumers than it
>>   actually is.) Plus it applies to food, rent, utilities... Absolutely
>>   everything. It is *not* a minor tax by any stretch of the
>>   imagination when you consider the full implications of how it's
>>   implemented.
>
>I understand this, but I was in Japan at the time of the
>implementation.

So was I. Maybe we can form a fraternity of people who lived through
this trauma :-)

>It was rather strange in that prices a) went up by the 3% exactly as
>you would expect or b) prices did not change at all!  In the latter
>case, what happened wa that the RETAIL price was dropped to the point
>that the 3% tax brought the product back up to the original price.
>(Kind of odd, I thought).

On the surface this appeared to be so, but looking at the situation up
to a year later showed (in my mind) that the consumer was being
gouged.  In many cases, the shouhizei was touted as replacing higher
hidden taxes (that were in the approx. 15% range for major home
appliances) and the Japanese consumer was being promised that all
kinds of products would go down in price after the 3% shouhizei took
effect.  As you note, things either a) went up or b) stayed the same.
I don't remember any prices that: c) went down. (At least not any that
*stayed* down--there were some sales that took place soon after
implementation of the tax to spur consumption that can't be counted.)

Weak as they are, Japanese consumer watchdog groups found widespread
evidence that many retailers were using this as an excuse for a 3%
price increase even when the effect should have been for prices to
drop or stay the same.

But I digress. My main point is *not* that the shouhizei caused prices
to go up. My point is that it represents a significant tax burden on
those living in Japan--far beyond what you'd expect from the nominal
3% that gets so much lip-service.  In that it was intended to replace
and unify many other burdensome taxes, it is not surprising that
prices did not jump dramatically upon it's implementation. I'd just
say that a group of significant taxes were replaced by a single
significant tax. I am not claiming that a previously non-existent
burden appeared at the time the shouhizei was implemented.

>Also, many of the
>"mom-and-pop" stores were exempt from charging the sales tax, the
>stated theory being that they couldn't afford to lower their prices to
>absorb the tax. Now, quite a few of those M&P shops DID charge sales
>tax, but I am fully certain they turned that extra 3% over to the
>government like good citizens :-)

There was evidence from the same consumer group that it was being
pocketed in many cases. I believe that this exemption was eventually
removed (is not in effect anymore) and is now a non-issue.

>>2. Local taxes are completely inconsistent. Some localities have very,
>>   very high juuminzei. (Like Kanagawa-ken where I lived the last year
>>   I was in Japan.) On the other hand, some localities have relatively
>>   low rates. So it's not possible to make a blanket statement that
>>   it's a reasonable tax. Also, it's tied to your salary for the
>>   previous tax year, so it's kind of like an income tax. It's also
>>   tied to the size/quality of place you live in, so if you live in a
>>   recently-built, decent-sized place with say five rooms and happened
>>   to earn good money the year before (say 8 million+ yen) this can
>>   easily get up to 4,000 to 5,000 dollars.  Again this is not always
>>   a minor tax; there are a variety of factors that can make it much
>>   higher than even your income tax.
>
>I thought I had stated that the local tax varied, though I had no idea
>it varied so widely. My apologies for the omission. Perhaps we ought
>to form a 'database' of taxes. When I lived in Mitaka-shi, I payed
>about $1,000 on an income of Y7 million, new apartment, 3 room. In
>Koganei-shi, I payed about the same, for an income of Y8 million, new
>apartment, 5 rooms.

You did say they varied. I wanted to clarify how much variation was
possible. In fact, I used to live in Kogane-shi (Kita-kogane to be
exact) and it was more reasonable there. I didn't consider it as low
though. Just think, we've probably tried to ignore each others'
existence on the train before (as gaijin in Japan are often wont to
do for some odd reason).

>The take-home lesson from that would appear to be: DON'T LIVE IN KANEGAWA!

Indeed. Don't.

-- Tad Perry   Internet:    tvp@gibdo.engr.washington.edu
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