Have you noticed you’re paying more when you buy a new notebook? Or when you go to the new Burger King. Should you eat-in or take-out? The new consumption tax rates started last year but many students are still not clear on how it affects their wallet. 

The new system includes “reduced” tax rates (8%) and “complex” tax rates (10%). The main difference is that the “reduced” tax rate is applied to everyday items, while the “complex” tax rate is applied to products that require labor (or service). For example, an 8% tax is applied to things like rice, bottled water, take-out food items, printed newspapers, etc. On the other hand, 10% is for things like tap water, eat-in restaurants, electronic newspaper, etc. 

This complicated consumption tax system was put in place for two reasons: to fund pension payments to Japan’s growing elderly population and to be used as a transitional phase before converting to a complete 10% tax system in the near future. Whatever the reason, it’s affecting your student okozukai! 

For example, you pay more for sitting down and eating inside a restaurant versus ordering take-out of the same dish. This is because when you eat inside a restaurant, waiters will serve your food. This is a service provided by the restaurant, hence the 10% tax is applied. On the other hand, taking out doesn’t require additional labor from the restaurant’s side, so you’ll pay 2% less. Make sense? 

The interesting thing is that fast food chains like Burger King and McDonald’s don’t directly pass on the tax increase to their eat-in customers. They kept the prices the same to reduce any confusion during the payment process, and to simplify the order for the staff and customers alike. So next time you go to the new Burger King, don’t worry. You won’t be paying extra to sit upstairs and eat.