Decision on Japan Consumption Tax Cut Left to PM After Cross-Party Talks Fail
The plan would ease household costs but faces questions over how Japan will replace lost revenue.
- On Thursday, Prime Minister Sanae Takaichi is expected to instruct the Liberal Democratic Party to slash the food consumption tax from 8% to 1% for two years, beginning in April 2027.
- The LDP and Japan Innovation Party pledged this reduction during the February Lower House, positioning the plan as a 'transitional measure' until a new benefit system launches in 2029.
- Since March, the National Council has held over 20 working-level rounds of discussions, yet Itsunori Onodera, the working group's chair, confirmed on Wednesday that no consensus on concrete proposals emerged.
- Implementing this goal costs 5 trillion yen annually; the government proposed 600 billion yen in cash handouts and plans subsidy cuts rather than issuing government bonds to cover lost tax revenue.
- Aiming for Cabinet approval early next month, Takaichi vowed to submit related bills to parliament, hoping the public will 'feel the benefits of reduced tax burden as soon as possible.
12 Articles
12 Articles
Japanese Prime Minister Sanae Takaichi is considering lowering the VAT on food to 1 percent. This is intended to compensate households for rising costs. "In the Netherlands, such a plan would cost about 6 billion euros; I don't see that happening here anytime soon," says BNR's resident economist Han de Jong.
Decision on Japan consumption tax cut left to PM after cross-party talks fail
Japan's ruling and opposition parties on Wednesday wrapped up months of discussions on a proposed consumption tax cut on food and beverages without a consensus, leaving the decision on the step aimed at mitigating the impact of inflation on consumer spending to Prime Minister Sanae Takaichi.
To cope with prolonged price increases, the Sanae Takaichi administration is considering a temporary two-year reduction in the consumption tax on food products, from 8% to 1%, starting next spring. However, a survey conducted by the Asahi Shimbun of 107 major companies revealed that only a small percentage of companies supported the tax cut…
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