Japan hikes consumption tax, despite recession fears

TOKYO, Sept 29 (AFP): From October 01, Japan finally implements a much-delayed consumption tax hike, raising the rate from eight per cent to 10 per cent, despite fears the move could cause a recession.

The worries have receded somewhat in recent months, and the government insists the increase is necessary to fund key policy priorities.

The increase covers almost all purchases, from electronics and alcohol to books and cars. The government has however made a few exceptions. Magazines and newspapers that publish more than twice a week will stay at eight per cent, along with food items purchased for consumption off-site.

That means groceries will stay at the old rate, along with food purchased for takeout. But it puts some food retailers, including bakeries and the country's ubiquitous convenience stores in a bind because customers can choose to eat their purchases in store or outside, requiring two different rates.

Prime Minister Shinzo Abe's government has twice delayed implementing the hike over fears it could hit the country's fragile economic growth.