Japan mulls sparing some food from consumption tax hike

The Japanese government has said it will consider ways to mitigate some of the impact of its planned consumption tax hike, including the possibility of exempting certain foodstuffs.

Japan is set to increase its flat consumption tax on products from 8% to 10% in April 2017. Prime Minister Shinzo Abe has asked the tax policy commission to look at how the impact of the tax increase could be softened in order to support consumer spending in the country.

One possibility mooted is the exclusion of food or drink products from the rise. However, critics in the Japanese press claim different tax rates would be a costly burden on small businesses.

The news follows a cabinet shuffle in which Abe appointed veteran Motoo Hayashi as Japan's Minister of Economy,Trade and Industry. Hayashi was tasked with the implementation of structural reforms to strengthen Japan's economy in the face of the country's ageing population and declining birthrate. The higher consumption tax is seen as crucial to tackle the rising wellfare bill which is, partially, linked to the cost of caring for Japan's elderly population.