Japan's consumption tax on goods and services has arguably been unpopular from the get-go. Introduced at 3 percent in 1989 as a means of improving public finances, the rate was raised to 5 percent in 1997, 8 percent in 2014 and, from Oct. 1 of this year, to 10 percent.
As we shall see, the latest tax hike is likely to have more far-reaching impacts on consumer behavior than before. A growing number of retailers, manufacturers and financial service providers are viewing the latest increase as an opportunity to harness information technology and customer relationship marketing to blunt the tax's impact — such as by offering bonus points and other premiums, discounts and rebates.
The tax hike is also expected to hasten the general trend, already in motion, toward cashless transactions.
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