The Asian country of Japan is soon going to have its first sales tax increase in years. Due to this, shoppers in Japan are busy buying a number of goods ranging from gold to ice cream. The government of Japan has decided to increase the country’s sales tax in order to deal with its deteriorating national debt.
Thousands and even millions of shoppers can be seen rushing towards stores in an attempt to purchase as much as they can before the tax increases to 8% from the current 5% on Tuesday, April 1, 2014. With the upcoming expected situation, there are fears that another wave of an economic slump will hit the country. In 1997, a higher levy was brought by the Japanese government, after which the country endured years of deflation, as well as poor economic growth.
The decision to increase sales tax is being carefully handled by the Prime Minister Shinzo Abe, as he is trying his best to shift the economy of the country out of the vicious cycle of falling prices and poor growth. On March 28, 2014, the latest figures have shown that consumer prices in Japan rose yet again in February 2014, which means that the efforts of Tokyo to handle 15 years of deflation was generating steam.
The biggest concern is that the last tax rise had turned away consumers from spending, which in turn led to falling prices.
Photo Credits: Yahoo