In a significant policy move, Japanese Prime Minister Sanae Takaichi is set to direct the ruling Liberal Democratic Party to advance a proposal aimed at slashing the consumption tax on food items. The plan, which seeks to reduce the tax from 8% to 1%, is scheduled to take effect for a two-year period beginning in April 2027.
This initiative emerges from a protracted stalemate in cross-party discussions regarding tax reform. The government, along with its ruling coalition partners, is advocating for this temporary tax reduction as a means to alleviate the financial burden on consumers. In addition to the tax cut, the strategy includes providing cash assistance specifically targeted at low- and middle-income households.
To bolster this effort, the proposal encompasses a financial support package worth approximately ¥600 billion. This funding is intended to further ease the cost-of-living pressures that many households are currently facing.
The government is working towards finalizing the details of this policy by early August. The plan is to introduce the requisite legislation during an extraordinary session of parliament later this year, ensuring that the measures are in place by the following April.