Govt To Ban Tax Refunds Under Customer Reward Programs

TOKYO (Nikkei)--The government has drawn up a bill prohibiting retailers from offering consumption-tax refunds in the form of shopping points after the tax rate goes up to 8% in April 2014.

The bill, presented to the ruling Liberal Democratic Party on Monday, is designed to ensure that the tax hike will be properly reflected in product and service prices.

The legislation would make it illegal for retailers to offer no-consumption-tax sales through March 2017, including offering tax refunds as part of customer reward programs. The tax rate is slated to go up from the current 5% to 8% in April 2014 and to 10% in October 2015.

The ban was initially proposed by the LDP, which is concerned that major retailers that wield significant clout in the industry may not let smaller suppliers add on the tax hike to their wholesale prices. Repeat offenders would be subject to improvement orders by the Fair Trade Commission.

Retailers would also be banned from running advertising offering to discount the consumption-tax-increase portion, or promising sales points equivalent to the amount of the tax increase.

(The Nikkei, March 19 morning edition)

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