Consumption Tax Increase to 10%

At the present time, this being the last day of January, it appears that the biggest societal change we can expect in 2019 is the increase of the national sales tax to 10%, exclusive of comestibles, sometime the middle of the year. (Whether the coronation of a new emperor will bring a greater measure of change to the nation remains to be seen.) The announcement of this calamity, naturally, provides a short-term boost to the economy as anxious consumers scramble to make all their big purchases before the increase.

That people respond to incentives should be blatantly obvious, but it's a cornerstone of progressive policy that there will always be an inexhaustable supply of rich people willing to part with their money. 8% was already enough of a drag, with plenty of people around me working to restrict their consumption of goods in order to not fall behind financially.

It's a bit like being a hamster on a treadmill, with the speed increasing in small increments every so often, so you have to run slightly faster in order to stay in one place.

People respond to incentives. It is a basic law of economics that anything subdidised with increase and anything taxed will decrease. If you want to increase a thing, subdidise it; if you want to curtail it, tax it. The rationale in the case of the so-called 'consumption tax' is, apparently, that the tax is applied to things of which people cannot possibly reduce their consumption. A not insignificant portion of the population, however, is certainly trying. In the face of such a response to the incentive, the state will have to continually raise the tax rate little by little every few years, in the manner of boiling a frog. The slow augmentation of increase also helps to prevent large segments of the population from dropping out of the economy completely or nearly so, by adopting something like a barter system among neighbours and communities, especially with things like food and basic services (that the heads of state decided to cap the rate on foodstuffs at 8%--for now--presumably indicates that they foresaw this potentiality.)

Something akin to large-scale abandoning of the state-side economy may happen at some point in future anyway, even if the tax is increased so slowly that people don't notice it. Simply, if the tax rate climbs high enough it becomes unbearable under normal circumstances--and recent talk of implementing a cashless society, with all the invasion of privacy and curtailment of basic economic freedom that entails could make the black market very attractive to a great many normally law-abiding citizens. Such has been the case in most, or perhaps all, economies subject to a tax rate amounting to more than a tithing, in historical record.

None of this is particularly controversial, though perhaps not pleasant to discuss. Ensuring that citizens continue to spend lawfully regardless of the tax rate could perhaps be accomplished through suitable programming in schools. It worked fairly well where I come from.

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