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Japan PM's tax giveaway roils markets and worries voters
Prime Minister Sanae Takaichi's two-year exemption of the 8% food consumption tax aims to ease inflation but risks adding $32.8 billion annually without clear funding.
- Last week, Prime Minister Sanae Takaichi dissolved parliament and pledged to exempt food products from an eight percent consumption tax for two years ahead of the February 8 vote.
- Facing higher inflation, economists cautioned about the fiscal trade‑offs as consumer prices excluding fresh food rose year‑on‑year in December and the Bank of Japan raised inflation forecasts through 2027.
- Currency traders pushed the yen lower as investors weighed fiscal risk; yields on 30- and 40-year bonds jumped to record highs amid anxiety over the $135 billion stimulus package.
- Despite defence of the plan, markets and many voters remain unconvinced, raising political risk as a Nikkei poll found 56 percent doubt the exemption's effectiveness, while Takaichi's ruling coalition seeks a public committee.
- Analysts warned of `Truss shock` echoes as a risk, Kumano said, while the government could issue shorter‑maturity debt and the Bank of Japan could boost bond purchases amid Japan's current‑account surplus and modest deficit.
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Japan PM's tax giveaway roils markets and worries voters
Ahead of a snap election in Japan, Prime Minister Sanae Takaichi has pledged to scrap a tax on food, but a lack of clear funding is unnerving markets and voters.
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Lack of clear funding: Japan PM's tax giveaway roils markets and worries voters
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Total News Sources17
Leaning Left0Leaning Right4Center5Last UpdatedBias Distribution56% Center
Bias Distribution
- 56% of the sources are Center
56% Center
C 56%
R 44%
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