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. Takaichi is expected on Thursday to instruct her Liberal Democratic Party to move ahead with the plan to slash the tax rate to one per cent from the current eight per cent for two years from April 2027.
The ruling camp has been pushing for it and will now work towards Cabinet approval early next month. A summary report on their discussions was presented at a meeting of a cross-party national council on taxation and social security on Wednesday, with the report also referring to opposition parties’ proposals such as providing cash handouts, which would take less time to implement than a tax cut, and a permanent tax reduction amid prolonged inflation.
“As the government and as a ruling party, we will immediately consider our policy,” Takaichi told the meeting. Takaichi, seen as a fiscal dove who is facing a decline in approval ratings for her Cabinet in recent media polls, has vowed to quickly submit related bills to parliament once the council presents its view.
She hopes that the public will “feel the benefits of reduced tax burden as soon as possible.” The move comes after the LDP and its junior coalition ally, the Japan Innovation Party, promised to cut the consumption tax rate on food products to zero for two years in their campaign for the House of Representatives election in February.
Kyodo
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