Revised policy: Discounts allowed if retailers don't tout tax

April 27, 2013

By HITOSHI KUJIRAOKA/ Staff Writer

Retailers in Japan will have to watch how they word their advertisements if the government has its way.

While the government plans to legally ban retailers from offering discount sales aimed at offsetting planned consumption tax hikes, officials are now indicating that exemptions will likely be made for discounts that do not openly address the tax issue.

The consumption tax rate will be raised from its current 5 percent to 8 percent in April 2014 and to 10 percent in October 2015.

In March, the government submitted a bill to impose the ban temporarily through March 2017. The bill is currently under Diet deliberations.

The government has said the measure is intended to allow companies to smoothly pass on the tax increase through the price of their products. It would also protect wholesalers by prohibiting major retailers from forcing them to drop wholesale prices so that retailers can maintain or reduce prices for customers.

While the government initially considered forbidding a broad range of discounts, including those that only touted "across-the-board discounts" and "3-percent discounts," a strong backlash from the retailing industry has led the government to backpedal.

"Even in the absence of an explicit mention of the consumption tax, a ban will be imposed as long as the connection is obvious," Shuichi Sugahisa, a director-general of the Consumer Affairs Agency, told a Diet session on April 24. But he backtracked two days later.

"Basically, no ban will be imposed if the advertisements do not touch upon the 'consumption tax,' or even just 'tax,'" he told the Diet on April 26.

Finance Minister Taro Aso also confirmed the change in stance.

"It would be difficult to ban notices that simply say, '3-percent discounts,'" Aso said at a news conference on April 26.

That indicates the government will likely tolerate sales that tout, "Discounts on all items," "3-percent discounts" and "Living-friendly spring sales."

By HITOSHI KUJIRAOKA/ Staff Writer
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An Osaka supermarket openly touts offsetting the consumption tax during a discount sale in November 1998. The consumption tax rate was raised from 3 percent to the current 5 percent in April 1997. (Asahi Shimbun file photo)

An Osaka supermarket openly touts offsetting the consumption tax during a discount sale in November 1998. The consumption tax rate was raised from 3 percent to the current 5 percent in April 1997. (Asahi Shimbun file photo)

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  • An Osaka supermarket openly touts offsetting the consumption tax during a discount sale in November 1998. The consumption tax rate was raised from 3 percent to the current 5 percent in April 1997. (Asahi Shimbun file photo)

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