Food in Japan is subject to VAT at the rate of eight percent. This taxation is very unpopular, and all political parties that participated in the February parliamentary elections promised to abolish or at least reduce it in the face of the high cost of living.
Takaičiová and her Liberal Democratic Party (LDP), which claimed a landslide victory in the elections, promised to completely abolish food taxation for two years, while this measure was supposed to come into effect by next March, The Guardian reports.
Since the election, however, Takaičiová has faced calls from opposition parties to set a firm date when food taxation will be abolished. In the middle of May, the Prime Minister finally admitted that the whole matter was blocked by cash registers in stores. She called the current situation “a disgrace to Japan”.
“That we cannot flexibly change the level of taxation even in the event of a pandemic or major disasters is pathetic,” declared Takaičiová.
Although the problem with setting up the cash registers, the solution of which would take at least a year, has already been confirmed by their manufacturers, political opponents accuse the Prime Minister of using the cash registers as an excuse to postpone the abolition of VAT, while her government is looking for ways to finance a pre-election promise.
The abolition of taxation would cost the Japanese Ministry of Finance approximately five trillion yen (654.5 billion crowns) annually. Takaičiová then recorded to her critics when she herself acknowledged last year that the readjustment of the cash registers will take some time, so it cannot be a problem that would suddenly surprise her.
Meanwhile, the government came up with a compromise. Specifically, he is currently considering reducing VAT to one percent, which could be implemented within five or six months. The government would thus partially fulfill the pre-election promise and at the same time save about four billion dollars (83.4 billion crowns).
