Price tags

I realized that most prices in shops and supermarkets do not include tax in Japan. I find it very annoying as the amount to pay at the till is always inflated compared to the original desplayed price. Is there a reason they don't put the full price included tax on the tags?

Yes, I agree it is extremely annoying. It used to be the law that prices include taxes until the consumption tax was increased last spring. The consumption tax will be increased once more in spring 2017, and I hope that afterwards it becomes the law again that taxes are included in prices tags.

Some shops include a 8% consumer tax on the goods and services but most shops don't. This is because it looks more expensive if it added a 8% tax on that.
(eg, 1980 Yen(excluded 8% tax) and 2138 Yen(included 8% tax) looks different).

Thanks Tokyo friend.
Well maybe it works for Japanese customers but for foreigners feels like cheating.
If I see an item that costs Y1980 I use to prepare the exact amount of money before approaching the cashier to realize thereafter that I have to pay Y2000 something. It happened to me few times I didn't have enough money and had to leave my shopping cart at the check-out, so embarrassing...

I also find it intensively irritating.
Especially as many shops seemed to use this loophole to confuse customers and hide prices increases over and above the 2.85% tax increase; with many shops sneaking on 8% increases in real terms and pretending it was the government's fault, not their greed. Another reason why a VAT system works better than sales tax.
America does the same with advertising tax free prices (plus the mandatory bribe required in service industries) so you really no idea what you'll pay. Come on Japan, you're better than this.

For the time being, as everyone knows that the consumption tax will again go up from the current 8% to 10%, many shops are refraining from posting tax inclusive prices, thus avoiding having to re-do all the price tags to include the 8%. They'll have to do it all over again when it goes up to 10% if they make the prices all inclusive.

I found the state sales taxes in the US to be annoying too, and theirs vary from one state to another if you travel... please put up with this inconvenience for a while, until the tax goes up to 10%, then I am sure many retailers will switch over to "tax included" price tags (or at least calculation will be easier!).

I agree with AK; before the tax hike, all the price tags I saw always had both prices included, before tax and after tax. I think most businesses are just waiting for the increase to 10% so they wont have to redo everything over and over again.

I can't believe you are falling for this trick. Do you really believe that large shops, like supermarkets etc, don't want to change their price signs once in a 3 year period. Come on, they change some price signs more than once a week. It's the smaller retailers that are likely to change their prices less often, and it's these I find that still post tax included prices. It's a policy that retailers love as it confusers consumers into spending more; that's why in countries with strong consumer protection laws, this practice is outlawed as it used to be in Japan and will be again.

The other benefit is it hid the above tax increase price rises.

Thanks AK but I'm afraid the inconvenience will go on for 2 years as the 10% tax upgrade is due in 2017.
Plenty of time for retailers to change price tags don't you think?
Retail prices change all the time regardless of tax at the retailers discretion so I don't think the problem is changing the price tags twice.
It sounds very much as a way of hiding price rises by retailers and attract more customers.

It's not too much of a problem, is it?

Things will cost 8% more than the sticker price. 8% isn't a naturally easy number to calculate, but 10% is.

Doesn't everyone just mentally add 10%, and use that as a materially correct estimate?

Re the point about sales tax vs VAT, that's a red herring. VAT is a sales tax. It's just another name for a sales tax. The only difference is that (in Europe, at least) VAT is included in *most* prices (although not all). It would be a simple thing to operate Japanese or US sales tax in the same way as European VAT.

No VAT is not another name for sales tax. It's a valued added tax and is an entirely different concept. The clue is in the name. i.e. tax is only paid on the value added at each point in the process rather than sale price.
So increasing VAT by 3% increases the tax by 3% of final item/service pre tax price. With a sales tax system, tax will be paid at each stage, raw materials, middle men processing etc etc, so the tax increase will compound in the final price. So a 3% rise in sales tax will usually result in a more than 3% rise in the amount of tax paid on an individual item. The amount will depend on the number of stages in the supply chain and it is impossible for a consumer to know if the price increase is the passing on of a the tax rise at all stages or if (as I suspect in many cases) there is price gouging under the cover of the rise.

Pretty shocking for someone not to know this basic difference, yet feel entitled to stick their oar in a discussion.

Thank you, O Lady Kodaira, for your gracious and respectful reply.

Apart from the fact that a 3% increase in VAT will not mean a 3% increase in the sales price, and that VAT is actually charged at every stage in the production process where a material changes hands between processors, I'm sure you are taking comfort from your superior answer.

However, I still don't see how any of this makes it an insurmountable object to roughly calculate what the till price will be if you know the sticker price and the sales tax rate is 8% (which, lest we forget, is the actual thing under discussion).

Firstly, I didn't say a 3% increase in VAT will result in a 3% increase in sales price. Please reread my above reply more carefully.
Secondly, for VAT, unlike sales tax it is not due at every stage on the full sales price (where VAT is paid by a VAT-Registered business, it is reclaimed or offset against their own VAT liability). That is the whole point. (except where a business is not VAT-Registered when they will pay VAT on their purchases, but their downstream customers won't be charged VAT on the value added at that stage).
Please do some basic reading on tax matters before embarrassing yourself further.

The original question of why has been answered (it used to be illegal, but is temporarily allowed during this time of tax adjustment). Why shops want to do this is now also being discussed; one possibility that it hides innate prices rises has been suggested, this wouldn't be possible with a VAT system rather than a sales tax system.

As to why it's annoying, I want to know what things will cost me rather than having to calculate or approximate a price. I might only have a certain amount of cash-money with me or want to compare prices from my memory quickly.
Lots of research has been done into these systems and the reason why shops like displaying tax-free prices, is that people tend to spend more money on shopping.

It's obvious that they do it to make it look cheaper and thus "cheat" you to spend more.

What I don't get is, why many shops have a nice pre-tax price, like a coffee can be 280 or 320 yen, then they add the tax then the price is 303 or 346 yen. I'd happily pay 305 and 350 yen to get rid of the 1 yen coins.

Shops should just round the final price to the nearest 5 yen, half the time the shop wins, the other half the customer wins.

I agree with Lady Kodaira that as a customer I don't want to bother calculating the correct price after tax when going shopping. I simply want to pay at the till what displayed on the tag, end of the story. I doubt if Japan adopted this cheating system to target Chinese shoppers who increasingly visit Japan to purchase high quality products... I heard they have the same system in China... But definitely it's not a good move to target Westerners, at least Europeans. All prices in Europe are displayed after taxes.
Rounding the price is also a good suggestion to avoid collecting bags of coins: last week I went to a restaurant which advertised Y1000 lunch set having exactly a Y1000 note in my wallet; when paying I discovered that the bill was Y1080 so that I had to change a Y10000 note... I was furious!

Lady Kodaira, you are as arrogant as you are ignorant. VAT is charged on the full sales price to the final customer, and is not charged at all to VAT-registered business. I know, I live in a VAT country, unlike you.

Thank you Firas, that is exactly what I said. (though sometimes VAT-registered business do pay VAT which they then have to reclaim or offset). So I'm not sure where ignorance comes into this.

The dark side of Japan :
Price tags and foreign credit cards.
It's still a long way to go before Japan SERIOUSLY invests in tourism.

What is wrong with foreign cards in Japan? I have been using mines since the 1990s without a problem..

Do your cards have a chip and PIN? mine do.

Bonsoir Renard.
I'm talking about ATMs.
Most of them don't accept foreign cards.
It is not common paying with card in supermarkets in Japan therefore it's always recommended to have some cash at hand.
While Japanese cards are accepted by any ATM in Europe, only Post offices and 7/11s accept foreign cards to withdraw cash in Japan.
That's really ridiculous.