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Japanese consumers angry, confused over higher sales tax rate for advance purchases

Yuna Haraguchi, second from right, visits a kimono shop with her mother Akiko, right, on Sept. 20, 2019 in preparation for her coming-of-age ceremony in January 2020, in Fukuoka's Chuo Ward. (Mainichi/Masanori Hirakawa)

FUKUOKA -- Japan is days away from an Oct. 1 consumption tax hike from 8% to 10%, but some consumers are hopping mad that they are already being charged the extra two points of tax on advance purchases.

Some items and services such as museum and commuter passes come under a tax "transition period," meaning those bought now are assessed at the current 8% rate even though they will be valid weeks or even months past the Oct. 1 hike. However, that does not hold true for advance payment for other items including traditional "randoseru" school backpacks -- often given to new primary school first-graders by their grandparents -- and kimono rentals.

The National Consumer Affairs Center of Japan (NCAC) told the Mainichi Shimbun that one woman in her 60s from central Japan's Tokai region had complained in August this year about being charged the 10% tax for a school backpack she plans to give to her granddaughter. The item was an advance order with delivery scheduled for November, and the woman was displeased that she was charged the higher rate "even though the hike hasn't happened yet."

Meanwhile, a woman in her 40s from the same region contacted the NCAC over a "furisode" long-sleeve kimono rental for her daughter's coming-of-age ceremony next January. The mother had signed a contract for the kimono plus dressing, hair and makeup services all the way back in 2017 and paid 200,000 yen, 8% tax included. However, the shop apparently contacted her early this year and said that since the ceremony would be in 2020, "when the tax rate will be 10%, we'd like you to pay the difference."

The NCAC has not tracked how many of these kinds of complaints it has received, but said that those regarding advance orders or contract fees for things like school backpacks, kimono rentals and even gym memberships have been especially prominent. The center added that angry consumers have also touched on kimono rental shop marketing campaigns encouraging people to make reservations "before the tax hike!"

In fact, the National Tax Agency has a list of just 10 products and services such as train passes that come under the tax "transition period" system. And even these items are subject to detailed conditions for assessment at the 8% tax rate, such as the date of a contract. In principle, everything else, from big ticket items like cars and houses to contracted services, must be assessed at 10% if they are to be delivered on or after Oct. 1.

"You may see cases of businesses pushing consumers to buy things or sign contracts quickly, ahead of the tax hike, but I would like people to make cool decisions," commented Yukihiro Asami, a law professor and consumer affairs expert at Kurume University. "People should be especially careful to check which tax rate is being assessed when there is some time between the contract signing date and the delivery date (of the service or item)."

(Japanese original by Masanori Hirakawa, Kyushu News Department)

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