Japan Economy: Tokyo to raise consumption tax on October 1

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Japan will raise the tax on most non-food items from eight percent to ten percent, a fiscal measure government has delayed implementing twice. But consumers may encounter some confusion concerning the new tax, as CGTN's Terrence Terashima reports.

As consumption tax increase approaches, Japanese consumers and businesses are worried about the confusion that might erupt from a dual tax system. The consumption tax rate is due to rise from 8 to 10 percent from October 1st. However, some products, such as food and non-alcoholic beverages, will remain at 8 percent.

Officials said this dual system is aimed to lighten the consumer burden, but experts worry that it will only cause more confusion. The tax rate will differ depending on where you decide to eat.

TERRENCE TERASHIMA TOKYO "What is confusing for most people is that the tax rate differs from 8 percent when you decide to take the food out, or 10 percent when you choose to eat inside the shop."

It will be difficult to enforce the rule when the customer says they changed their minds after paying less tax

KUMI IIMURA FINANCIAL PLANNER "This 8 and 10 percent taxation system will be confusing not only to the consumers but to the shop owners as well. It can cause all sorts of misunderstanding and problems."

To prevent confusion, McDonald's Japan announced that its tax-included prices would be the same regardless of whether a customer eats in or takes out. Other concerns from the consumption tax hike are consumer sentiment. The previous tax hike in 2014, brought about a post-increase slump in spending, which dragged the economy into recession.

KUMI IIMURA FINANCIAL PLANNER "The impact it will have on an average Japanese household is about three to four thousand yen a month. I don't think it will reduce household spending that much this time."

However, experts worry that the Japanese already lack the appetite to increase spending, and this dual tax system might also reduce their desire to dine out. Terrence Terashima, CGTN, Tokyo.