The government plans to cut the consumption tax rate on food and beverages from 8% to 1% for two years starting in April 2027, but the rate for dining out will stay frozen at 10%. Mitsushi Mukumoto, chairman of the Japan Food Service Association, warned this would have “a negative impact on people’s motivation to eat out,” fearing customer numbers could fall by more than 20%, just as they did when the reduced tax rate was introduced in 2019. In the thread, posters kept talking past each other over how the tax system actually works — specifically, how much consumption tax restaurants really bear on their purchases — and doubts were raised about how effective the meal-voucher scheme reportedly being considered by the Prime Minister’s Office would actually be.
Reactions to support measures for farmers and restaurants tied to the consumption tax cut are split by industry. The agricultural sector, whose requests were reflected in the plan, has welcomed it, while the restaurant industry has voiced frustration that the demand-boosting measures it wanted were left out.
The government plans to lower the consumption tax rate on food and beverages from 8% to 1% for a limited two years starting in April 2027, while keeping the rate for dining out frozen at 10%. There’s concern that the widening gap versus the 1% rate for bento boxes and prepared foods will drive customers away.
Mitsushi Mukumoto, chairman of the Japan Food Service Association (Minato, Tokyo), an industry group representing restaurant businesses, said at a press conference on the 10th, “What worries me most is that this will hurt people’s motivation to eat out.” Citing the fallout from 2019, when dining out was excluded from the reduced tax rate, he said, “Some expect customer numbers to drop by more than 20%.”
Source: nikkei.com / Original article here
How many times do I have to say it — it's NOT going down…
Don't they still have to pay tax on the 9-point gap between 1% and 10%?
I work at a major restaurant chain, and apparently the tax treatment of big chains' food purchases is different from regular grocery shopping. This was explained in one of DPP leader Yuichiro Tamaki's videos too. Just because the tax rate on groceries drops for regular consumers under this reform doesn't mean restaurant chains' purchase costs drop the same way.
So how does that actually get handled?
Restaurants never actually had to bear the consumption tax on their purchases to begin with — doesn't matter if it's 8% or 1%, same either way.
What are you talking about? Restaurants pay consumption tax when they buy food too, don't they?
It does go down if the restaurant is tax-exempt or uses simplified taxation, but for the majority under standard taxation, it effectively doesn't.
What do you mean it "effectively doesn't go down"? Explain in detail.
Say the tax rate is 8% and you buy a daikon radish priced at ¥100 before tax. You hand the supplier ¥108, but along with the daikon you also get an invoice showing you paid ¥8 in consumption tax.
The ¥100-for-daikon swap gets booked as an expense,
but the ¥8-for-invoice swap just changes the form of an asset —
because "tax paid in advance" is itself an "asset."
The invoice works like a voucher you can use when paying consumption tax to the tax office (= the purchase tax credit)
(in practice you don't submit them one by one, but that's the principle)
and if you don't use it all up, it gets converted back into cash or a bank deposit (= a refund).
So even though it looks like you're "paying consumption tax" to your supplier, your company's assets never actually shrink, not even for an instant.
●Meant for use at izakayas and similar spots:
Beer voucher booklet — ¥20 each, 11 per booklet
Snack voucher booklet — ¥40 each, 11 per booklet
(each a one-year supply)
●Meant for use at restaurants and similar spots:
¥60-off vouchers, 11 per booklet
(a one-year supply)
Roughly designed to offset
the 9-point gap versus the grocery tax rate
The printing costs for these vouchers are probably higher than their face value lol
"A year's worth" — so that means 365 sets?
Standard taxation:
Subtract the consumption tax paid on purchases from the consumption tax collected on sales, and remit the difference to the government.
Sales tax ¥100 − purchase tax ¥40 = ¥60 (tax owed)
Simplified taxation:
Each industry is assigned a "deemed purchase ratio."
You multiply the sales tax by that ratio to estimate the tax paid on purchases.
Sales tax − sales tax × (1−0.6) = ¥40 (tax owed)
If this goes ahead as is, businesses under simplified taxation end up deducting a purchase-tax amount they never actually paid.
In reality they should owe 100−0=¥100,
but they get away with paying just ¥40. That's the problem.
Correction:
Standard taxation:
Subtract the consumption tax paid on purchases from the consumption tax collected on sales, and remit the difference to the government.
Sales tax ¥100 − purchase tax ¥60 = ¥40 (tax owed)
Simplified taxation:
Each industry is assigned a "deemed purchase ratio."
You multiply the sales tax by that ratio to estimate the tax paid on purchases.
Sales tax − sales tax × (1−0.6) = ¥40 (tax owed)
If this goes ahead as is, businesses under simplified taxation end up deducting a purchase-tax amount they never actually paid.
In reality they should owe 100−0=¥100,
but they only end up remitting ¥40. That's the problem.
So you're saying there are cases where restaurants under simplified taxation actually owe more than the consumption tax they never paid?
In principle they'd need to temporarily change the deemed purchase ratios for restaurants and farming under simplified taxation, but I haven't heard anything about that happening this time.
When the reduced tax rate was introduced, the ratio for farming was changed from 70% to 80%…
It's the opposite.
Big companies use standard taxation:
¥100 consumption tax collected on sales
¥0 consumption tax paid on purchases (paid nothing)
So they remit ¥100 — that's normal.
A restaurant on simplified taxation:
¥100 consumption tax collected on sales
¥0 consumption tax paid on purchases (paid nothing)
But somehow only needs to remit ¥60.
At least, that's how it'll work if nothing changes.
Is the deemed purchase ratio for restaurants under simplified taxation 60%?
Just like back then — throw subsidies at it and they'll just raise prices even more.
That's exactly why I figured they weren't planning to do it — so is it actually happening?
No idea. They probably won't touch the deemed purchase ratio, I'd guess.
Honestly, every restaurant except the ones serving inbound tourists and the elite can go under. People are struggling with poverty like this — there's no way they can afford to eat out as a luxury.
Probably because they've got money to spare.
It's a hassle, they don't know how, they're too tired to bother — I think it's a mix of things.
Personally I mostly eat out when work's busy, and switch to cooking at home when I've got time off.
Background and Key Points of This Discussion
Under Japan’s consumption tax system, most restaurants calculate what they owe using either “standard taxation” or “simplified taxation” (based on a deemed purchase ratio), so a drop in wholesale prices doesn’t automatically mean a lower tax bill. When the reduced tax rate was introduced in 2019, the deemed purchase ratio for farming was raised from 70% to 80%, but no equivalent adjustment for the restaurant industry has been announced this time. The thread’s disagreement essentially comes down to whether posters correctly understand this “purchase tax credit” mechanism. There’s also persistent concern, rooted in the price hikes that plagued the earlier Go To Travel campaign, that a voucher-style handout could invite similar opportunistic price increases. It’s worth noting this report comes at a stage when the policy details are still unsettled, and how the actual support measures get designed will depend on further discussion ahead.
*This article is compiled as an excerpt/summary from the 5ch (News Speed+) thread “Support Measures for the Food Consumption Tax Cut — Restaurant Industry Calls for “Introducing Meal Vouchers”“.
