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发帖数: 11530 | 1 Why Japan’s 8% Tax Mauled Economy as Europe Tolerates 20%
By Simon Kennedy Nov 18, 2014 6:02 PM CT
Pedestrians walk along a crowded shopping street in Barcelona. Since 2010,
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Japanese Prime Minister Shinzo Abe is discovering that haste makes waste.
Trying to double his nation’s sales tax to 10 percent over an 18-month
period has resulted in the fourth recession since 2008 and the need to
postpone the increase’s second part planned for next October. With an
election now pending, the levy may be on hold at 8 percent until 2017.
The lesson is that the increases proved too much, too soon, and baby steps
may have been more prudent, with the initial 3 percentage-point boost
equivalent to 60 percent of the original level. In contrast, the U.K.’s
2011 increase of 2.5 percentage points amounted to a much smaller 14 percent
boost and didn’t generate a recession.
“Proportionally the increase is a lot bigger in Japan, where people are
used to paying low consumption tax,” said Julian Jessop, chief
international economist at research firm Capital Economics Ltd. in London.
“Psychologically it’s a much bigger deal because it’s a meaningful amount
of money.”
In fact the planned increase would be almost unprecedented among members of
the Organization for Economic Cooperation and Development since sales taxes
first began to be introduced in the late 1960s, as governments sought to
expand their tax bases through hard-to-dodge revenue-raising measures.
Other countries’ recent sales-tax tweaks have been modest by comparison in
relative terms. Since 2010, Spain increased its levy from 16 percent to 21
percent yet did so in two shifts spread over three years. Italy has raised
its rate to 22 percent from 20 percent in 2011, also in two moves.
1979 Increase
The only shift that really rivals Japan’s is the U.K. government’s 1979
action to raise its value-added tax to 15 percent from 8 percent in one
swoop. While that was aimed at containing inflation rather than restraining
fiscal excesses, it still helped push the British economy into a recession.
Japan waited until 1989 to catch up with international counterparts and
introduce a 3 percent tax. By 1997, in a lesson probably now understood by
Abe, an increase to 5 percent cost then-Prime Minister Ryutaro Hashimoto his
job after the economy slumped.
As recently as last month, the International Monetary Fund said the second
consumption-tax increase was “critical to establish a track record of
fiscal discipline.”
The U.K. has shown more recently that it’s possible to raise the rate
without causing a recession. While consumer spending contracted in the first
quarter and flat-lined in the second after the value-added tax was elevated
in January 2011 to 20 percent, buying has gained every period since.
Leverage Rising
Now Abe will have to wait to adjust his levy even as he seeks ways to
control debt that advisers to his government forecast to rise to 264 percent
of gross domestic product by 2030 from 227 percent in 2013.
Jessop at Capital Economics says Abe may find that voters still fear more
increases, given that 10 percent is about half of the rates in the U.K.,
France and Germany.
“It’s worth stressing even 10 percent leaves it relatively low, so people
may be worried of something further,” he said.
To contact the reporter on this story: Simon Kennedy in London at skennedy4@
bloomberg.net |
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