Japan planned VAT hike hits tourists

Thai travellers planning a visit to Japan should be aware that a sales tax increase is due to take affect there in April, so should consider bringing foreward their trip, local outbound tour operators have warned.

Japan will raise its national sales tax to 8% from the current 5% in April, and the Japanese government will then decide whether to iincrease it further, to 10%, by October 2015.

The Thai Travel Agents Association (TTAA) said tour operators have known about the tax increase since last year, but few Thai tourists know about it.

"If Thai tourists know the consumption tax in Japan will rise in the next two months, many of them will make a quicker decision to book package tours and travel to the Land of Rising Sun this year," said TTAA president Suthipong Pheunphiphop.

He said the rise in sales tax will significantly affect the spending of tourists, particularly if it reaches 10%, as shopping is the most popular activity for Thai visitors.

That means they will have to pay double the current tax on goods if they go there for shopping next year.

Japan ranks first among the top five destinations for Thai tourists, followed by South Korea, Myanmar, Hong Kong and Singapore.

The popularity of Japan was boosted after Tokyo waived tourist visa fees for Thailand last year. Several hundred thousand Thais travel to Japan each month.

 Mr Suthipong said the rise in the sales tax to 8% in April will not affect package tour prices to Japan this year, Package tour prices will increase next year in line with the higher cost when the tax reaches 10%.

The TTAA is confident that tour bookings to Japan at the 14th Thai International Travel Fair due to be organised late this month will significantly increase.

Japan is expected to be the most popular destination at the fair. A standard package tour is priced from 40,000 baht for six days and four nights and premium package is about 60,000 baht for six days and four nights.

However, the local political unrest may affect outbound tourism sentiment, said Mr Suthipong. The TTAA previously expected outbound tourist numbers to Japan would double to 1 million this year. But after political tensions escalated, it cut the figure to 750,000.

"I think if the political situation grows violent, outbound tourism will drop," said Mr Suthipong.

Chotechuang Soorangura, the managing director of NS Travel & Tours Co, said some operators may increase the package tour prices in line with higher costs next year. But fierce competition will pressure many to maintain their prices.

"We'll wait and see the market trend and environment, as this will tell us how much we can increase our tour package prices,'' he said, adding that Thai tourists are particularly sensitive to pricing.

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