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Australian EPA: Let them eat beef (but not cheese)

April 14th, 2014 by

Stuck in the middle: Australian cheese competing in the dairy case with New Zealand and Switzerland

Stuck in the middle: Australia cheese competing in the dairy case with New Zealand and Switzerland

Though its participation in the Trans-Pacific Partnership seems to be dead in the water for the time being, last week Japan signed an Economic Partnership Agreement (EPA) with Australia that could revive Japan’s TPP hopes, but before we get to who lost and who won in the Australian deal, let’s talk about cheese.

Personally, we were looking forward to some sort or tariff reduction on Aussie cheese, not because we prefer Aussie cheese over other kinds, but because all so-called natural cheese — meaning not processed — is expensive in Japan owing to the dairy farmers lobby and their demand for high tariffs on imported milk products.

Japan is close to an EPA with the European Union, but the cheese tariff will likely remain. The Australian EPA only addresses natural cheese that is exported to Japan for purposes of being blended with other ingredients to make processed cheese. The tariff on such cheeses will be reduced from 40 to 0 percent over time, but the tariff on natural cheese that is sold to the public in stores will remain at 29.8 percent, so no cheap cheddar right away.

According to Asahi Shimbun, cheese consumption in Japan is steadily rising. Japanese bought 285,000 tons of cheese in 2012, twice as much as they did in 1992. The agriculture ministry predicts that consumption will increase by 40,000 tons over the next 10 years, and domestic production will not be able to satisfy this demand.

Nevertheless, dairy farmers insist on keeping the tariff at its current level, otherwise they say they’ll be wiped out. We’re talking small dairy farmers, not big companies like Meiji and Yukijirushi, which will probably benefit from the tariff since they deal in processed cheese. Naturally, Australian dairy farmers are disappointed that the tariff for natural cheese was not reduced, since the bulk of their export business is cheese for consumers, not cheese for processing.

On the other hand, beef producers are quite happy with the EPA. As a result of the agreement, beef exports to Japan are expected to increase by $5.5 billion (¥530 billion) over the next 20 years, which should give pause to American trade negotiators. Right now the tariff on beef is 38.5 percent, and that will decrease to 19.5 percent in 18 years for frozen beef and to 23.5 percent for refrigerated beef.

Vintners are even more encouraged by the EPA. In seven years the tariff on Australian wine to Japan will be reduced to zero, which means they’ll be more competitive with wines from Chile, which completed an EPA with Japan some years ago. Since then, sales of Australian wines in Japan declined by a third. Right now Australia claims 4 percent of Japan’s wine market and Chile 14 percent.

As with cheese, wine consumption in Japan is also on the rise, so Australian wine makers are confident they can regain the market share they lost when Chile signed its EPA with Japan. However, it should also be noted that in accordance with the aforementioned EPA that Japan is working out with the EU, European wine tariffs will also eventually be reduced to zero, so competition will likely get fiercer.

What does Japan get out of this? Mainly less restrictions for automobile sales in Australia. Half the goods and services exported to Australia from Japan is in the form of automobiles: 359,170 cars in 2013, second only to the U.S. — a far second, since American exported 1.7 million vehicles to Down Under. Japan was desperate to get a deal on cars because in accordance with a trade agreement with Korea, Australian duties on Korean cars will drop to zero by 2015.

For the record, 70 percent of Australian exports to Japan are in the energy and mining sectors — coal, natural gas, iron ore — and aren’t taxed because Japan no longer has much of a mining industry to protect and desperately needs these resources. However, it should be pointed out that Australia is No. 10 on the list of countries receiving Japanese exports, about ¥1.7 trillion a year; while Japan is No. 3 on the list of countries receiving Australian exports, about ¥5 trillion. So you decide who gets the better deal in this agreement.

Us? We’d rather have cheese.

Some local governments think health checkups save money, and some don’t

April 5th, 2014 by

Preemptive stride: If you do have metabolic syndrome you can guess what the doctor will tell you to do

Preemptive stride: If you do have metabolic syndrome you can guess what the doctor will tell you to do

Though there’s a minority opinion to the contrary, conventional wisdom says that regular health checkups are the only way to prevent the development of major illnesses, so, logically, they should also help reduce healthcare costs in the long run. This is the concept behind tokutei kenko kensa, or “special health checkups,” that were started six years ago by the Ministry of Health, Labor and Welfare. The main target is metabolic syndrome, the inevitable gain in fat that accompanies midddle age and which, unchecked, is thought to be the gateway to many so-called lifestyle diseases, like diabetes.

The idea is that local governments would provide checkups to insured residents between the ages of 40 and 74 with national insurance, which, in principle, doesn’t cover regular general health checkups since Japan’s public health system is designed to treat existing problems. If the special checkups uncover unhealthy situations, then the individuals are advised with regard to better diets or exercise regimens, or even pharmaceutical assistance, so as to head off costly treatment down the road, like, for instance, dialysis, which can cost on average ¥5 million a year, most of which ends up being paid for by the government, both local and central.

According to the Asahi Shimbun more than half the nation’s local governments are struggling with deficits in their health insurance programs, and thus usually have to shift money from other sectors to pay for them. Consequently, many are intensifying their checkup programs in the hope that it will reduce these costs in the future. The tricky part is that with such programs you have to spend money to save it. As of 2012, Soja in Okayama Prefecture was only seeing 27 percent of residents eligible show up for the special checkup, so they came up with a scheme.

The special checkup and the locally sponsored cancer screening each cost ¥5,000, so if anyone who undergoes the checks and doesn’t use their insurance for a year afterward, the money will be refunded. Though it may not sound like much of an incentive, the main idea is to spread awareness of the checkups. Kiyosu, a city in Aichi Prefecture, increased its checkup rate to 46 percent after offering coupons that can be used for substantial discounts at over 100 stores and restaurants in the area to people who come in for the checkup. People who undergo the checkup are told not to eat anything that day beforehand, so the coupons are a kind of reward, though one has to wonder if it’s wise to encourage people who really do have metabolic syndrome to go out afterwards and partake of the town’s meibutsu (special local product), fried pork cutlet in sweet brown sauce.

Kumagaya in Saitama Prefecture saw its participation rate rise from 23 to 27 percent after it started offering travel coupons. Takanabe in Miyazaki Prefecture partnered with a local bank to offer participating residents a 0.05 percentage point bonus in interest on savings accounts, and the rate of participation jumped from 32 to 40 percent. Six separate districts in Higashi, Okinawa Prefecture started a competition to see which one could raise their participation rate the most, with the winning districts receiving cash bonuses ranging from ¥30,000 to ¥100,000, but since it was the district offices themselves getting this money it was difficult to pass the excitement of competition on to individual residents. In fact, after an initial spurt in participation the rate has fallen back down again, so the local governments are thinking of a new scheme that directly rewards residents.

Nationwide, however, the idea hasn’t been very successful. The health ministry aimed for a 65 percent participation rate, but latest figures show it’s only about 34 percent, a rise of only 2.8 percentage points since the checkup scheme was launched. For the most part, according to Asahi, local governments have no choice but to raise premiums on health insurance to address their deficits. The reasons for non-participation are not complicated. In surveys, people say they already visit a doctor regularly or don’t feel sick or just think it’s too much trouble, especially since many municipalities charge a nominal fee for the checkup.

In any case, there isn’t any real consensus on the efficacy of regular checkups on long-term medical costs. The city of Amagasaki did a study from 2008 to 2011 that found during these four years the average amount of money spent by the health insurance system on a resident who had undergone the checkups “and received medical advice” — about 65,000 people — was ¥990,000 less than the money spent on a resident who didn’t receive the checkup. However, Kure, in Hiroshima Prefecture, managed to decrease its outlays for medical care by ¥160 million in 2011-12 by eliminating “unnecessary” examinations, meaning they actively discourage residents from seeing a doctor for routine matters, and didn’t promote the special checkups, either. One bureaucrat told the Asahi that he understands the “significance” of the checkup but wonders if it may actually be a waste of money given that its underlying purpose is economical.

Call the sitter: Parents resort to online services out of economic necessity

March 31st, 2014 by

Public daycare center closed for the day

Public daycare center closed for the day

A few weeks ago news outlets were all over a story about the death of an infant who had been placed in the care of a young freelance babysitter. The media was quick to blame the mother, at least by implication, since she had found the man through an Internet portal site that matched people who needed babysitters with people who provided such services. Many of these providers seem to be unlicensed, but babysitting as a job description is relatively new to Japan.

What seemed unusual in this case — though it’s actually quite common — is that the two boys the mother left with the man were watched at the man’s apartment in Saitama Prefecture, rather than at the woman’s residence in Yokohama, which is normally the way babysitting works. In the woman’s defense, some media pointed out that she had used the man as a babysitter previously and didn’t trust him, but because he used a different name this time she wasn’t aware she was leaving her children in his care.

However irresponsible the woman was in this situation, the fact is that there is an increasing number of parents who rely on such services. The Internet portal site that the woman used has 10,000 registered users and 6,000 registered sitters. The paucity of daycare services in Japan is a well-covered issue, and some parents can’t wait for the government or the private sector to rectify the situation, especially if they have infants and toddlers, which conventional daycare centers don’t usually accept anyway.

An article in the March 26 Asahi Shimbun describes a 34-year-old Tokyo mother who, like her husband, is a music teacher. Most of their lessons are at night and they have a child who is less than a year old. In addition to not accepting babies most daycare facilities usually are closed after 5 or 6 in the evening. She makes ¥1,500 an hour, and uses freelance babysitters to take care of her baby. She checked all local public facilities and none could help her, so she queried professional babysitting services, but they charged ¥2,000-¥3,000 an hour, which was more than she and her husband could afford.

Then she went to a babysitting portal site and contacted 15 freelance sitters. They met face-to-face, which cost the couple money since the sitters consider interviews work time and also charge for transportation. They checked the sitters’ credentials, if they had any, and narrowed down their list to five. They even asked these candidates to “play” with their baby just to see what that was like.

In the end they decided on three sitters whom they patronize when the need arises. The article mentions another couple who run a beauty salon where the clientele mostly shows up after 5. They have three kids, ranging in age from 2 to 14, and they use babysitters six days a week. Two of the three sitters they regularly use they found on portal sites. They pay ¥800 an hour and tell the reporter that they interviewed all three potential sitters extensively.

There are several reasons for the rise of babysitting in Japan: more parents work at night; in most areas there are no established services that take care of children in emergencies; and the demographic prominence of single-parent households, where the parent typically makes little money. About 80 local governments have set up places called ninka yakan hoikujo (authorized night-time nurseries), but despite the description only five are open 24 hours a day. The rest tend to close at around 10 p.m.

Most parents who patronize babysitters say they need 24-hour facilities that will charge according to the customer’s ability to pay. The lack of alternatives to conventional day care is probably one of the reasons the babysitting business is so loosely regulated, but in any case Asahi says the welfare ministry wants to triple the number of public night-time nursery facilities by March of next year, as well as strengthen the credential system for babysitters. A representative of a childcare business association says this will be difficult unless the government convinces the public at large that these are necessary services.

A survey conducted by the city of Yokohama found that of 31,000 respondents who have left their children with someone else overnight 85 percent counted on relatives or friends and 16 percent used outside services, either authorized facilities or babysitters (multiple answers were allowed). As it is, most facilities still don’t take children less than a year old. Seventeen percent said they have brought their child to work with them. The welfare ministry’s own survey of working parents say 55 percent have never even heard of nighttime facilities.

A more established babysitting service in Japan is so-called baby hotels, which work the same way as pet hotels: You drop your baby off and the staff takes care of him or her for as long as necessary. The welfare minister says that in 2013 there were 1,830 registered baby hotels in Japan, an increase of 121 from 2012. We looked at some web sites, and some are open 24 hours, while some have limited hours, meaning that they don’t take babies for overnight stays. You can pay by the hour (as low as ¥500) or the day, or the month.

The baby hotel business started in the 1970s and used to have a bad reputation, but there has obviously always been a need for such services. Still, it wasn’t until recently, with the greater visibility of working mothers and single parents, that such services came to the awareness of the general public.

A journalist in the magazine Aera who has covered this issue extensively says that the parents who patronize babysitting portal sites and the babysitters who offer their services on them have one thing in common: they both tend to be poorer than average. As one of the parents interviewed for the Asahi article admits, the Yokohama woman whose child died in the care of that babysitter “could have been me.”

Consumption tax hike projected to increase appeal of electronic money

March 24th, 2014 by

The ones: You'll be seeing more of these guys in the near future

The ones: You’ll be seeing more of these guys in the near future

Last month the national mint intensified production of ¥1 coins in anticipation of the consumption tax hike on April 1. The Ministry of Finance wants 26 million of them manufactured by the end of March, and then another 160 million after the start of the new fiscal year. Once the consumption tax goes up from 5 to 8 percent, retailers will need more small change. With a 5 percent tax, it’s relatively easy for stores to limit their use of coins since they can set prices based on multiples of 5. Maybe it’s possible to do that with multiples of 8, too, but not right away, and many fear they will not have enough ¥1 coins on hand when the tax hike goes into effect. An employee of the nationwide ¥100 shop CanDo told Asahi Shimbun, “Altough we sometimes receive ¥1 coins in payment from customers, we don’t recycle them as change to other customers, but now we’re trying to hoard as many as possible.”

If the consumption tax increase is an inconvenience to retailers, it’s even more of a pain in the neck for the government, since it costs between ¥2 and ¥3 to make a ¥1 coin, which is 100 percent aluminum. It’s the first time the mint has produced ¥1 coins on anything approaching this scale in four years. It will also produce an extra 100 million ¥5 coins, just to be safe. The government doesn’t want to relive the small change panic that happened in 1989, when the 3 percent consumption tax was first introduced. Tokyo Shimbun reports that it took the finance ministry three years to put into circulation the extra 7.5 billion ¥1 coins necessary to make the new tax workable. Then, when the consumption tax went up to 5 percent in 1997 the demand for ¥1 coins decreased. At present there are 39 billion ¥1 coins in circulation, which is 3 billion less than the peak number in circulation in 2002.

But the development that really started making small change obsolete was the introduction of electronic money in 2001 with the emergence of the Edy card system, which is now owned by the Internet mall Rakuten. According to the Bank of Japan, in 2012 electronic money was used for ¥2.5 trillion in transactions, which is three times the amount used in 2008. Understandably, the electronic money industry thinks the consumption tax hike will increase usage even more. Edy, which is accepted at 370,000 retailers and vending machines nationwide, told Asahi that it is using the opportunity of the hike to increase consumer awareness for their system, and will offer bonus points for new users who sign up. NTT DoCoMo, which offers the iD electronic money system through wallet functions in mobile phones, now accepted at 514,000 points-of-sale (POS), says it is contracting with even more retailers to install electronic readers, as well as with parking lots and restaurants.

The biggest beneficiary may be EM systems run by transportation entities. Suica and Pasmo cards, each of which are usable at 240,000 POS, offer commuters and travelers a discount. People who buy tickets for train and bus rides will pay more since transport companies will round up fares to the nearest multiple of ¥10 after April 1, while EM users will pay the exact fare. For instance, a JR fare that now costs ¥450 will increase to ¥464 with the tax hike, and that is what EM users will pay. Ticket-buyers, however, will have to pay ¥470.

The mint isn’t the only institution working overtime to compensate for the tax hike. Japan Post is rushing to print ¥2 stamps to augment ¥50 postcards and ¥80 letter stamps. For the past 20 years, all postage has been in multiples of ¥10, so there was never a need for post offices to stock ¥1 coins.

But all this printing and minting will be short-lived if the consumption tax is hiked again, to 10 percent, in the fall of 2015, which is what the government is planning to do. In that case, the tax will actually be a multiple of 10, thus making it easy for everyone, especially cashiers who now dread all those elderly people wasting their time as they dig through their purses and pockets for exact change.

Believe it or not, pay phones are here to stay

March 18th, 2014 by

Hello stranger: Pay phone in residential area of Sakae, Chiba Prefecture

Hello stranger: Pay phone in residential area of Sakae, Chiba Prefecture

Last December, during its end-of-quarter news conference, NTT announced that it would shorten the length of time for a basic call on public telephones when the consumption tax is raised from 5 to 8 percent in April. Since pay phones don’t give change and NTT discontinued its IC card service in 2006, it would have been difficult to pass the extra tax levy on to users, so the more logical scheme was to make a ¥10 call shorter. As it stands, ¥10 will get you 60 seconds of connection to a number within the same calling exchange during the day. After April it will be shortened to something like 58 seconds.

At the time it wasn’t exactly breaking news, and for obvious reasons. Who uses pay phones any more? As long as you have a cell phone you likely won’t even notice that pay phones still exist, but they do. According to a government white paper on telecommunications that came out last year and cited on the Sarayomi blog, as of March 2013 there were 210,000 pay phones in Japan. In 2002 there were 680,000. (The peak year was 1986, when there were 910,000.) That means two-thirds disappeared over an 11-year period.

Another interesting statistic is that there are more analog pay phones than digital ones. At one point around the turn of the millennium, NTT was keen on so-called IC data public phones, those gray ones with the phone jacks to which you could hook up your laptop. NTT stopped IC data service in 2006, so even if you see a gray pay phone it isn’t hooked up to a data line any more.

But even if the number of pay phones continues to dwindle, they won’t disappear entirely. They are considered necessary facilities in an emergency, so a minimum number will always remain. The problem for NTT is that very few people use them any more, and even those who do don’t use them as much as they used to (85 percent of revenues come from local calls; people who use pay phones are more conscious of the money they are spending than are cell phone users).

In other words, public phones no longer pay for themselves. They still cost money in terms of maintenance and rental for the space they occupy. In 2012, revenues from public phones stood at ¥7 billion, but the cost of keeping them running was ¥12.5 billion.

So who pays the difference? Well, you, of course. If you have a land line or a cell phone there is an item on your monthly bill called a universal service fee, which is now about ¥3 (it used to be ¥5), but that only covers half the shortfall, so some people are saying that it should be doubled, especially since the Great East Japan Earthquake, when pay phones were the only means of communication for some people.

Government’s new scheme to bolster social security is still hopeless

March 10th, 2014 by

This document was sent out several years ago after the government discovered that it had lost the pension payment records of 50 million people. The document would be used to help locate those records. The program was expensive, but very few people responded.

This document was sent out several years ago after the government discovered that it had lost the pension payment records of 50 million people. The document would be used to help locate those records. The program was expensive, but very few people responded.

The Ministry of Health, Labor and Welfare has announced that starting in April it will “take action” to increase the “collection rate” of national pension premiums, specifically those for kokumin nenkin, the obligatory pension plan for the self-employed and those who otherwise don’t belong to the company-supported kosei nenkin pension system. According to Tokyo Shimbun the idea is to send warning letters to individuals whose incomes are more than ¥4 million and who haven’t contributed for at least 13 consecutive months.

Presumably, the next step will be for the ministry to start siezing assets. The initial criteria would target approximately 140,000 pension scofflaws. Eventually, however, they will go after everyone who hasn’t paid, and since it is estimated that close to 3 million people who should be paying into the system haven’t been for at least 24 months, the job seems daunting if not impossible.

There are many reasons for this delinquency, but the main one has to do with the system itself. Basic pensions apply not only to the self-employed, but anyone who is employed part-time or on a contract basis, meaning their employers don’t pay into the kosei nenkin system. It also includes the unemployed, because according to the law every adult who lives in Japan must belong to the system, whether they work or not. And the premiums are the same, regardless of income or lack thereof: right now ¥15,250 a month (it goes up gradually every year).

The ministry assumes that about 90,000 people who should be “members” are not, and that number is probably higher, but in any case, excluding those who are exempt from paying (very poor, disabled, etc.), the rate of payment into the kokumin nenkin fund was only 59 percent as of 2012, and that portion continues to decline.

In a 2011 government survey, the number one demographic of delinquents was the unemployed, which is easy to understand. However, 28 percent of delinquent payers had part-time jobs, and they said they didn’t make enough to pay. Moreover, 22 percent of the so-called deadbeats were self-employed or working in their families’ businesses. Overall, 74 percent of those who said they couldn’t pay gave their reason as “can’t afford the premiums.” The percentage is increasing because the number of non-regular employees is also increasing.

But the government says that 10.5 percent of households whose income exceeds ¥10 million have also failed to pay their fair share, and it’s these people they are citing first. After that, 17 percent of households with incomes of between ¥5 and ¥10 million are delinquent. Both of these seemingly solvent income brackets say in surveys that they, too, cannot afford the premiums due to “financial difficulties,” but there is also a considerable number who refuse to pay simply because they “don’t trust the system.”

The pension system’s fairness has always been a point of contention. As it stands, if a person pays his fair share for 40 years, the maximum monthly payment he receives at 65 will be ¥66,000, which is not enough to live off of. The main concept behind kokumin nenkin when it was first devised was that the self-employed would still have income from their businesses or the sale of their businesses when they retired. Not only is that not necessarily true, but the bulk of basic pension members are non-regular employees who have nothing else to fall back on when they retire, unless they’ve saved and invested, which is unlikely.

Also, everyone in Japan must also pay into the national health insurance plan, which for most people takes priority since anyone can get sick at any time, but you only retire when you get old. Then there are people with some money who have bought life insurance annuity plans that give them some income when they retire. They may not see the point in paying double for a pension, so they don’t bother paying nenkin.

But the most discouraging aspect of the system is that in order to receive even the minimum payment at retirement, which is less than ¥30,000 a month, you have to pay into the system for at least 25 years. Regardless of one’s mathematical skills, it doesn’t take much calculating to understand that paying ¥15,000 a month for 25 years for a pension that will be so low one will have to apply for supplemental welfare (which is increasingly the case) is not worth it.

What’s particularly maddening about the government’s refusal to acknowledge reality is that it continues to throw money at the problem. Tokyo Shimbun estimates that for every ¥100 that the ministry will collect with its new hardline policy starting in April, it will spend ¥90. In real terms, the ministry has budgeted ¥5.3 billion for “forced collections.” Also, according to the law, it can only make delinquents pay up to two years retroactively, and if the individual has been delinquent for much longer than that the individual may wonder, “What’s the point?,” since he can only receive a pension if he’s paid for a full 25 years.

There is no sense to the system, especially when you consider that the Democratic Party of Japan wanted to change it to something more rational, and made the Liberal Democratic Party promise to revise the system when it gave up the reins of government in December 2012. Since then the LDP has done nothing, because it believes that any change would be unfair to the people who have paid into the system properly all along. Famous last words.

Tax structure encourages getting wasted

March 3rd, 2014 by

Zero's not in it: Selection of Suntory chuhai at discount store

Zero’s not in it: Selection of Suntory chuhai at discount store

There’s no end to speculation as to how the consumption tax increase in April will affect the country, socially as well as economically. Last week, Tokyo Shimbun published a conversation between a college professor and one of its reporters about the effect on beer prices and, in turn, beer consumption, which last year declined for the ninth year in a row.

When the reporter asks the professor about this effect the professor feigns amazement that the reporter, who specializes in tax matters, didn’t know that “42 percent of the price you pay for your beer is already tax.” He goes on to explain that the beer tax is a holdover from the 19th century, when beer was considered a luxury item. Since then it’s become much more the drink of common people thanks to improved and cheaper refrigeration, but the government liked the revenues too much and maintained the tax structure for beer. To the professor’s thinking, the tax should be pegged to alcoholic content, and since beer’s is relatively low the tax should also be lower than it is for other alcoholic beverages.

It’s easy to get people to pay the tax since it isn’t indicated on the package or even at the place of sale, unlike the consumption tax. For the sake of reference, when you buy a 350-ml can of beer you pay ¥77 in tax. If you bought the same volume of whiskey you’d pay ¥129 in tax; shochu ¥70, nihonshu ¥42 and wine ¥28.

Basically, that means the consumption tax is levied on a tax, since the consumption tax is determined by the price that the wholesaler and retailer pays for the product, which, by the time they receive it, already includes the alcohol tax that is levied at the manufacturing stage. “When the government said they’d increase the consumption tax, people got angry,” says the professor. “But no one says anything about the alcohol tax, because people don’t notice it.” The reporter thinks that a “tax on a tax” violates the principle of taxation. The professor doesn’t disagree, and adds that beer accounts for half the revenues brought in by the alcohol tax. Because beer makers are large companies with responsible accounting practices, it’s easy for the Finance Ministry to collect the tax. The reporter says, “Why don’t manufacturers get angry?”

Actually, that’s why they started making the “beer-like” happoshu in the late ’90s. Because the ingredients used in happoshu are different from those that define beer for tax purposes, the beer tax doesn’t apply, and so makers could sell it at a much lower price. The government, of course, didn’t like that and eventually raised the tax rate for happoshu, too, though not as high as it is for beer (¥46 for a 350-ml can). Makers came back again with dai-san (third type) beverages, which use fermented soybeans for flavor instead of hops, and that got around the happoshu tax (¥28 for 350-ml). But while these new, cheaper brews outsold “real” beer handily, sales for all three beverages have still decreased over time, due to the shrinking population and a younger generation of consumers who don’t drink as much as their parents did.

In that regard, beer makers don’t see much of an impact of the consumption tax hike on beer and beer-like beverage sales; or, at least, they don’t see any point in trying to offset the hike. But they are modifying their lines of canned drinks that contain shochu, colloquially called chuhai. As the price of chuhai goes up thanks to the consumption tax, they are increasing the alcohol content. In fact, many companies have already added more alcohol to their chuhai products.

Kirin Beer increased its Hyoketsu Strong from 8 percent to 9 percent alcohol, and in April it will boost its Hon-shibori Lime chuhai drink from 6 to 8 percent.

Asahi Beer is already advertising its new Karakuchi Shochu Highball, which is 8 percent, in a bid to persuade normal fans of high balls — whiskey and soda — to switch to shochu and soda. That’s a full 5 percentage points higher than Asahi’s other chuhai, Slat, and both beverages will be sold for the same price. (Note: Slat is aimed at young women and the word suggests slimness, though an English speaker may be forgiven for thinking the name an unfortunate choice for such a target group.)

Suntory’s chuhai product, -196 Degrees C Strong, which enjoyed a 22 percent share of the chuhai market in 2012 thanks to its already hefty alcohol content, will be strengthened from 8 to 9 percent. The company told Asahi Shimbun that it expects sales to grow by 8 percent.

The target is middle-aged and elderly men, the main demographic for alcoholic beverages anyway. Makers think they will be attracted to the cost effectiveness, according to the Asahi, which means they can “get drunk more easily” for the same amount of money. In many countries, tax on alcohol is referred to as a “sin tax,” since it has a double-edged purpose: raising revenues on a product or service that may be harmful to society, on the one hand, and on the other checking consumption of the harmful product or service by making it more expensive.

This latter purpose doesn’t seem to apply in Japan, where alcohol companies have figured out a way to use the tax structure to their advantage. There’s no sin in that.


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