Japanese Prime Minister Sanae Takaichi is poised to direct the Liberal Democratic Party to advance a proposal aimed at reducing the consumption tax on food items from the current rate of 8% to a mere 1%. This tax cut is planned to be in effect for a period of two years, starting in April 2027.
This initiative emerges amid a stalemate in cross-party discussions concerning tax reforms. The government, along with the ruling coalition, supports this temporary tax reduction as part of a broader strategy, which also includes providing cash assistance to low- and middle-income households. The proposal outlines an estimated ¥600 billion in financial aid to alleviate the burden of living costs further.
The government is targeting early August to finalize the details of this policy. To ensure its timely implementation, the plan is to introduce the necessary legislation during an extraordinary session of parliament later this year, aiming for the new measures to take effect by the following April.