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The story
The Japan Foodservice Association released survey results on the 9th from 204 member companies regarding the consumption tax cut on food planned for next April. 57.8% of companies expect customer numbers to decline from April onward, with a third of those forecasting a steep drop of “around 10%” or “over 15%.” Two-thirds of respondents also said it would take more than six months for customer numbers to return to previous levels. Since the tax cut applies only to groceries and excludes dining out, the industry is worried the price gap with supermarket bento boxes and prepared foods will widen further. On 5ch, discussion ranged from explanations of how the consumption tax actually works (the input tax credit) to debate over whether the restaurant industry deserves government support.
The Japan Foodservice Association, made up of restaurant companies, announced survey results on the 9th showing that roughly 60% of restaurant businesses expect customer numbers to decline if the consumption tax cut on food and beverages goes into effect next April.
The industry is concerned that since dining out is excluded from the tax cut, the price gap with supermarket bento boxes and similar products will widen, and it is calling on the government for support measures.
The survey covered association member companies and received responses from 204 of them. Of these, 57.8% expect customer numbers to fall from April onward. Those forecasting a decline of “around 10%” and “over 15%” together made up a third of respondents. Two-thirds said it would take more than six months for customer numbers to return to previous levels, reflecting strong anxiety that the drop in customers could drag on.
Source: news.yahoo.co.jp / Original article here
What people said
They can't even agree on where the money for the consumption tax cut itself is coming from, so where exactly is the money for supporting the industry supposed to come from?
Japan's probably headed toward the European model anyway, so I think the restaurant industry is going to shrink to some degree regardless.
There's this thing called the input tax credit, see…
It offsets against the consumption tax collected on sales,
so effectively you were never really paying the tax on your purchases in the first place.
Even if the tax on ingredient purchases goes down, it just means you owe more tax on sales — profit doesn't actually increase.
If there's no consumption tax on it, purchasing gets cheaper, right?
That doesn't add up to me.
Even if you pay less tax on purchases,
once you make sales you just end up remitting more tax than before anyway.
It's a meaningless tax cut.
Denmark 25% (food 25%)
Norway 25% (food 15%)
Finland 24% (food 14%)
Japan 10% (food 8%)
Japan's consumption tax is already low, so there's no need to cut it further, let alone abolish it.
The Nordic countries are high-welfare states — but Japan is cutting welfare. "No need for a tax cut or abolition"? That makes no sense to me.
Exactly.
Taxing more heavily those who can afford to spend on luxuries is basic policy.
Nobody's proposing to raise taxes on eating out, so quit complaining.
●A tax cut on food alone will have almost no effect.
And reverting it after just 2 years is a terrible policy 💀
🐻A consumption tax cut only matters if it's applied uniformly across the board
(take-home pay would rise, and electricity, water, utility bills — everything — would drop)
🐨Consumption tax isn't money a business holds in trust, so prices won't necessarily drop by the full 8% — prices are set by supply and demand
🐼A uniform tax cut does more to boost wages than it does to fight inflation (since consumption tax is effectively levied on labor costs too)
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If the consumption tax is going to be cut at all, it needs to be a "uniform cut" paired with scrapping the invoice system — and ideally the rate should be brought down to 0% permanently.
🐥What should actually be done:
●If small and midsize businesses stop owing tens of millions of yen in consumption tax a year, employees' take-home pay rises by over ¥200,000–300,000 annually.
●Cutting social insurance premiums raises take-home pay by several hundred thousand yen a year.
●Raising the income thresholds (the ¥1.78M/¥2M "wall") across the board raises take-home pay by over ¥100,000 a year.
https://www.youtube.com/watch?v=HqUkrupG04E
And the Yahoo News version:
"Is the government trying to destroy the restaurant industry?" — restaurant owners cry out as the consumption tax cut leaves "food at 1% but dining out at 10%," risking a customer exodus; already pushed to the limit by inflation, owners trying everything from "concept izakaya" gimmicks to get by, now calling for relief
https://news.yahoo.co.jp/articles/8dd6526a1fb49f64abd4ad682784a2b5f849e968?page=1
They should have let more of them go under during COVID.
Japan's about the only country dumb enough to go around protecting the restaurant industry.
This isn't the time to be burning through people, goods, and money on pointless cutthroat competition.
In the end the only ones actually profiting from all this are the landlords.
My hard-earned tax money going to shops I've never even set foot in.
Don't you mean the "Go To Travel" industry?
That's just indecisiveness — waiting to see the results and reacting after the fact.
Whether a company pays consumption tax or gets it refunded, its books don't move one millimeter into the black or the red.
It's not like purchasing suddenly got cheaper or anything like that.
That would be true if the restaurant were a small tax-exempt business.
But for the vast majority of restaurants, which are regular taxable businesses, this tax cut provides zero funding for any price cut.
Oh, I see. I'm not well versed in tax law so I don't fully get it, but apparently big companies like chains get no benefit from the tax cut.
Doesn't that mean big companies were already set up with tax advantages elsewhere? If they've been quietly enjoying that all along, it seems off for them to kick up a fuss only now that something's working against them.
To begin with, in any industry, for any product, you don't actually bear the consumption tax charged on your purchases.
When you buy meat for ¥1,080 (tax included), you're paying ¥1,080 and receiving ¥1,000 worth of meat plus an invoice worth ¥80.
Think of the invoice as a voucher that's only usable when you yourself remit consumption tax.
Even if the tax cut brings that down to ¥1,010 (tax included), you're paying ¥1,010 and receiving ¥1,000 worth of meat plus a ¥10 invoice.
Since the invoice can be used as a voucher later, nothing actually changes in substance.
Small tax-exempt businesses never remit consumption tax in the first place, so even when they receive an invoice, they have no occasion to use it as a voucher.
Probably not — the drop will likely be noticeable.
For reference, when the consumption tax was raised to 10%, demand for eating out fell 2–3%, which is actually a pretty big deal.
At that time food (including takeout) was taxed at 8% — a gap of only "2%" — and even that caused this much of a drop.
This time the tax gap is "10%." Of course the industry is demanding a response.
So what if dining out were also taxed at 1%? That would definitely pile more inflation (price hikes) on top of what's already happening — because if demand for eating out rose, you'd get shortages of ingredients and price increases.
The view is that dining out was excluded from the cut precisely out of fear of this.
Since ingredients used for restaurants aren't cleanly separated from regular groceries, naturally, prices for ordinary groceries would end up rising too! What is this nonsense!
Yeah right, as if.
"I'll skip eating out and just grab a bento to take home instead" — that's entirely plausible, though.
Even just 2% would be fine — lower the consumption tax across the board.
That's only doable if you massively cut elderly healthcare, pensions, and long-term care.
Background and Key Points of This Debate
The consumption tax currently stands at 10%, but a reduced rate of 8% already applies to food (for takeout). The tax cut now under discussion would lower the rate on food even further while leaving dining out excluded, widening the price gap with supermarket bento boxes and prepared foods even beyond today’s levels. The industry’s wariness is grounded in past experience: when the consumption tax was raised to 10% in 2019, demand for eating out fell 2–3% even though the gap with food was only 2% at the time. This time the gap could reach as much as 10%, which is driving the strong sense of alarm. A point raised repeatedly in the thread was a rebuttal to the view that “if the tax on ingredients goes down, purchasing gets cheaper, so prices should come down” — since tax paid on purchases is already effectively offset through the input tax credit, the cut itself provides no funding for price reductions. Differing understandings of this tax mechanism were what split opinion over the forecast of falling customer numbers.
*This article is excerpted and summarized from the 5ch (News Speed+) thread ‘[Food Tax Cut] 60% of Restaurants Expect Fewer Customers — Industry Group Requests Support, “Very Worried About the Perception That Only Dining Out Got More Expensive”‘.
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