Japan is about to get five percent more expensive

As Japan's population is becoming more and more elderly, the nation needs new forms of revenue to pay for increases in social security and medical care costs. The most obvious move is a Japanese consumption tax rise, but politicians are always weary of instituting this regressive tax, which would make living expenses even higher for a populace who has weathered a full decade of income decline.

Back during the Koizumi years, there had been lots of threats about raising the consumption tax, but now there are some signs that it may actually happen. The Keidanren business association has recommended that the rate be raised to at least 10 percent now and be brought later to European levels of 15 percent+. And people tend to listen to old guys in suits who own billions of the country's assets.

The DPJ government's response has been less than clear. Chief Cabinet Secretary Hirofumi Hirano said, for obvious electoral reasons, that a consumption tax rise isn't going to happen soon. Meanwhile, Finance Minister Naoto Kan basically said, it needs to happen, so now it's just about how to "sell" it to voters. Fortunately that "sale" will be five percent cheaper than all future sales in the country.

What does this Japanese consumption tax rise mean for you? It means that Japan -- a country already famous for being ridiculously expensive -- will be five percent more ridiculously expensive. Sure, that ¥270 beef bowl you eat at Yoshinoya is only looking at a ¥13.5 yen hike, but since you are eating it every weekday now in this sluggish economy, you lose the money to buy one beef bowl every month. Okay, maybe that doesn't sound like a lot, but it would truly add up if you went out and bought a Lamborghini every day.