CAUSE FOR CHEER
In 2017, the government decided it had enough. After revenue from beer had fallen 30 per cent from a 1994 peak, it decided to unite the tax bands of real beer, happoshu and third beer into one, a three-stage process that will be complete in 2026.
From a quality perspective, this is cause for cheer: Happoshu and third beers are varying degrees of average to awful. You might have encountered them during a night out at karaoke (the sore head is a giveaway) or just been unlucky enough to choose one from a convenience store shelf.
When money was tight, I switched to Clear Asahi, a “third type” alternative made with fermented barley. After a while, you tell yourself you hardly notice the difference.
After a raise at my old workplace, I was lucky enough to be able to afford to switch back to real beer. Now, even that can of Clear Asahi will cost about 10 yen more this month. Nearly a quarter of those surveyed last year by an organisation of brewers say they expect to drink more real beer after the changes come into effect.
But do most customers have the luxury of spending more? Although the tax on real beer will come down to nearly 55 yen by 2026 from 77 yen before 2020, it’s still twice the 28 yen levied on a can of third beer before the changes – further contributing to an erosion in spending power that is worrying the central bank.
Booze is far from the only segment of society that has fallen prey to expense-slashing and investing in the wrong things over the past three decades. But Japan is now at an inflection point: Companies have finally accepted the idea of passing on costs, and despite the backlash to former Bank of Japan Governor Haruhiko Kuroda’s comments last year, customers seem to be getting used to paying more.
Pay rates saw a significant rise earlier this year, while another welcome change in October was the lifting of the minimum wage to an average of 1,000 yen, the biggest hike since records began.
Yet it’s far from clear whether this is a lasting change or a one-time adjustment. Inflation is already coming down, which may dull the need for further salary increases next spring. The looming prospect of a recession in the US will be giving even cash-rich companies pause.
For now, with the rise of the “sober curious” youth who drink less alcohol than previous generations, pay might be less relevant than pensions.
That’s why the brewers are calling for further decreases in the beer tax, arguing the prevailing rate is 14 times that of Germany and seven times that of the US. That seems unlikely to carry too much weight in a nation where the debate currently revolves around how to finance ambitious defence and child-rearing plans.
Japan needs to put its money to work in the right areas – and discard the type of bad incentives that led to happoshu. If these changes can help shock the government out of its multi-decade economising mood, that would be something to raise a glass to.
Source: CNA
