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The regional consumption tax rate is set by local authorities and is combined with the national consumption tax rate to create a combined consumption tax charge which is applied to domestic goods and services. Until March 2014, the consumption tax rate was 5^th, and of this the regional consumption tax was 1%. From April 1^st 2014, the new consumption tax rate of 8% was introduced nationally, and of this new rate 6.3% is the national consumption tax rate and 1.7% is the regional consumption tax rate.

Of the total 8% consumption tax, the entire national consumption tax and 0.7% of the increased regional consumption tax will be used entirely for social security (pensions, medical services, nursing and increasing the birth rate).

Pensions

○National pension policy

Medical Services

○Vaccinations

○Cancer Screenings

○Infant and baby medical fee support  etc.

Nursing

○Supporting day centers and groups providing active lives for the elderly

○Home support

○Support for families caring for family members etc.

Increase the national birthrate

○ Nursery and kindergarten provision and management

○ Providing after school clubs and after school classes for children etc.

The reason for the tax hike as taken from the Ministry of Finance’s Homepage:

Why was consumption tax raised, and income tax or corporation tax?

“With the decrease in birth rate and rapidly aging population, the current generation of young workers is expected to decline while the number of elderly people increases. As the burden on the young to pay into social security and support the country increases, any increase in income and corporation tax would also affect these workers the most. Increasing consumption tax, which is not targeted at a specific group, and which can be shared between all citizens including the elderly, is the fairest solution to funding the social security system our aging society requires.”

https://www.mof.go.jp/faq/seimu/04.htm