Government and ruling party consider special measures to reduce food consumption tax, raising concerns about confusion among businesses and consumers

The government and ruling party are planning to create special and transitional measures for things such as replacing price tags at retail stores and pre-order sales, in conjunction with the implementation of the consumption tax cut on food products from April next year. However, with such a short preparation period, the system could become complex, leading to confusion among business operators and consumers. Support for agriculture, forestry and fisheries workers and the restaurant industry, whose businesses are under pressure due to tax cuts, will also be an issue.

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The proposed tax reform outline will take special measures for ``total amount display,'' which requires retailers to display prices that include tax. There will be a grace period of two months before and after the tax rate change on April 1 next year, allowing companies to attach price tags with a 1% tax rate before the tax cut, or to keep the price tag with a tax rate of 8% even after the tax cut.

This was done in consideration of stores that are open 24 hours a day, such as convenience stores, where price tags cannot be replaced at night. To avoid confusion among consumers, measures must be taken to prevent misunderstandings, such as posting on product shelves the following message: ``Price includes 8% tax.Payment will be made at the register at 1% tax rate.''

Transitional measures will be put in place for pre-order sales, such as regular deliveries of food delivered to homes once a month. Under normal rules, the tax rate is applied at the time the product is delivered, but in order to reduce the administrative burden on business operators, if the contract is signed before the end of this year and the payment is made before April 1 next year, the 8% tax rate will be applied even after the tax reduction when the product is received. However, the applicable tax rate will differ depending on the contract period, which may lead to people refraining from purchasing.

Special measures will also be taken for ``interim tax returns,'' in which businesses declare and pay consumption tax during the tax period. The system is to pay in advance in installments based on the previous year's tax results, but even after the tax reduction, if calculations are made based on the previous year's results, there is a risk of overpayments and worsening cash flow. For this reason, the tax return amount will be calculated using the new tax rate.

We will also support small-scale farmers, foresters, and fishermen. Approximately 80% of businesses are tax-exempt businesses with sales of 10 million yen or less, so they do not have to pay consumption tax received from customers. However, after the tax cut, the amount you receive will decrease, and the income you will have left will decrease. The draft outline includes the introduction of a system to provide benefits based on sales.

In the restaurant industry, where dine-in services are not eligible for tax breaks, there are concerns that customers will be turned away due to the widening tax rate difference between bento boxes and delicatessen meals. In addition to financial support, the draft outline provides "support for diversification such as takeout."