There was a one week effect-I can believe that. Console purchases were higher the week prior to the tax, then dropped substantially the week the tax went into effect. That already happened a few weeks ago and there was discussion of it on Neogaf.
But Japan's market has been in the overall doldrums for a long time and this VAT wont have a long term effect like that. It's not exactly an option to stop buying things forever, especially over 3%.
It is, however, an option to stop buying luxury goods or stop buying new clothing as often or stop buying higher priced foods as often or at all, etc. If you've been tracking what's been happening in Japan over the past 20 years, there's been a general trend downward, yes. As well as an upward trend in used product stores (very rare in the 80's while very common in the 2000's).
That increase in taxes means there is now 3% less to spend on everything. Since you can't stop buying food, paying rent, utilities, basic everyday living expenses, that means it's going to have to come from the portion going to "luxury goods" like consoles, new cars, new clothes, etc. And for many Japanese people that was already relatively low to begin with compared to the late 80's early 90's. While rent, utilities, taxes (all, not just sales tax), food, and overall cost of living was relatively high.
It's not surprising that it's a reality in the month the increase was introduced, because it was a pre-known situation. Off course it will guide the spending disproportionally in the short term in that scenario, but any long term effect by this alone should be fairly small.
Did you look at the numbers behind your link? it says spending dropped 4.6% compared to previous April. It dropped 13.3% compared to March, but that's hardly that big of a number during the month the change took effect and neither off those numbers are in reality a valid excuse for the low performance of consoles in Japan. The market for them has shrunk immensely over a longer period of time.
Yes, it's been on a general downward trend. However, the increase in the sales tax prompted a significantly larger decrease than can be accounted for by historical trends. Hence, why economists all missed the boat in predicting how much of an effect the sales tax might have and how many economists were shocked by how much of a drop there was in reality. A key failing of many Keynesian economists in underestimating the effects of taxation in attempting to control a region's economic performance.
As an individuals spendable wealth starts to suffer more and more pressure on one end via increased cost of living for basic daily/monthly required spending and commensurate pressure on the other end by increasingly heavy taxation, there has to come a breaking point at which people's spending habits must change. It's quite likely that innocuous 3% hike in Sales Tax represents one of those moments as everything has immediately gotten 3% more expensive. Versus corporate taxes which are hidden from the consumer and take time to filter down in the form of more expensive goods and services. Or even versus an increase in income tax which directly reduces a person's buying power but doesn't make what they buy more expensive and thus takes longer to filter down and effect a person's spending habits.
Regards,
SB