One yen coins

One Yen

Since arriving in Japan, the big topic of conversation has been the tax rate change. As of April 1, 2014, the sales tax rate is increasing from 5 percent to 8 percent. There has been a mad rush to buy goods before the change, especially higher-priced items where the rate has more impact.

NHK’s news had an interesting side story related to the hike. The one yen coin is basically a throwaway here. Most prices are rounded to the nearest tenth, so there isn’t much need for them with a 5 percent tax rate. However, the 8 percent rate increases the need for the coins.

Japan’s one-yen coin supply isn’t sufficient enough to handle the increased demand, so production of the coin has been restarted with new coins being created for the first time in four years. Since the coins are made of aluminum, there’s also an impact on acquisition of raw materials to make the coins.

As a former tax agency employee, I know lawmakers typically don’t think of all the impacts associated with a tax rate change. Apparently it’s a universal issue.

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