TheEconomistSeptember 28th 2019 331E
arlier thisyear the organisers of the
Rugby World Cup, now taking place in
Japan, held a briefing for bar and restaurant
owners in Oita, a city on the island of Kyu-
shu that will host five matches. As an ex-
ample of what to expect, the briefing in-
cluded a photo of a South Africa fan
holding five jugs of beer in one hand. Rug-
by fans are a thirsty lot, the audience were
warned. At the 2007 World Cup in France,
beer ran short in Marseille when South Af-
rica played Fiji. And something similar had
happened four years earlier when Ireland
played in Adelaide. The message to bar
owners was clear: stock up.
An influx of boozy rugby fans is not the
only reason for retailers to top up their in-
ventories this month. They must also pre-
pare for quick-footed customers hoping to
sidestep the onrushing taxman. On Octo-
ber 1st (after Scotland plays Samoa and be-
fore France meets America) Japan will raise
its consumption tax from 8% to 10%. The
tax falls on almost everything the Japanese
buy, including gadgets, cars, new homes,
magazines, restaurant meals and booze.Once in effect, the 10% rate will leave peo-
ple with less money to spend. Until then, it
gives consumers a powerful reason to buy
what they can sooner rather than later.
No tax is popular, but Japan’s consump-
tion tax has an unusually fraught history.
The cabinet first approved such a tax in
1979, but abandoned the idea after a public
outcry. A similar bill was introduced in
1987, then dropped for a similar reason.
After a gentle 3% tax was at last imposed in
1989, the rate was raised to 5% in 1997, con-
tributing to a nasty downturn. The econ-
omy also swooned in 2014 when the rate
was increased to 8% by Shinzo Abe’s newgovernment. Mr Abe had promised to raise
the tax again to 10% in 2015, in an attempt
to improve the government’s finances. But
the increase was postponed until 2017 and
then put off again until this year, even as
net public debt climbed past 150% of gdp.
Japan’s vaunted reputation for punctuality,
much admired by visitors to the World Cup,
seems not to apply to fiscal policy.
Despite the repeated delays, it is still not
clear the economy is ready for the higher
rate. Exports have fallen for nine months in
a row, thanks partly to America’s trade war
with China and Japan’s own tussle with
South Korea. Exports to China fell by 12% in
August, compared with a year earlier, and
sales to South Korea fell by 9%. (Japan did
strike a trade deal with America this week—
see finance section.) Business investment
is largely flat, because the expansion plans
of service industries, such as hotels, retail
and logistics, have been cancelled out by
nervous manufacturers. That has left con-
sumers to keep the economy expanding.
They accounted for 100% of the economy’s
growth in the second quarter. It therefore
seems an inopportune moment to extract
more yen from their pockets.
The tax increase in 2014 precipitated a
dramatic boom and bust in home-building
and consumption (especially purchases of
cars, furniture and appliances). Nothing
similarly spectacular has appeared in the
data so far this year (see chart on next
page). Home-builders have been busy
starting work on new owner-occupiedJapan’s economyStocks and scares
The last time the consumption tax rose, the economy stumbledAsia
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