Japan to Slash Sales Tax on Food as Inflation Bites
The plan would add cash handouts for low- to middle-income households and create about a 10 trillion yen revenue gap over two years, officials said.
- On Thursday, July 30, 2026, Japanese Prime Minister Sanae Takaichi announced a two-year reduction of the consumption tax on food and beverages from 8% to 1%, starting next April, to address rising living costs.
- Takaichi pivoted from her February campaign pledge of a zero-tax rate after learning that adjusting cash register systems would require too much time, settling on 1% as a practical "Transitional measure."
- Costing 10 trillion yen in lost revenue over two years, the plan requires alternative funding, which Takaichi promised to secure "without relying on deficit-covering bonds" to maintain market confidence.
- Emeritus economics professor Tsutomu Watanabe said the cut increases household purchasing power, "running counter to the Bank of Japan," while Former Foreign Minister Taro Kono warned there is "no guarantee" prices will fall.
- The tax rate returns to 8% in 2029, coinciding with the introduction of "meticulous subsidies" for lower-income workers; this timeline presents political risks as the restoration may occur shortly before a 2028 election.
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15 Articles
From next April, Japan will implement "the reduction of the tax on the sale of food and drink to 1% for two years," said Sanae Takaichi, Prime Minister.
Japanese Prime Minister Sanae Takaichi announced a major reduction in the consumption tax from April 2027, raising concerns among economists.
PM Takaichi aims to cut consumption tax on food to 1% from April
Japanese Prime Minister Takaichi Sanae has told her party's executives she plans to cut the consumption tax on food to 1 percent for two years starting in April. The plan includes benefits for low- and middle-income earners that would reduce their effective rate to zero.
Japan to cut consumption tax on food to 1% from April 2027: PM
Japanese Prime Minister Sanae Takaichi on Thursday said her government will implement a cut in the consumption tax rate on food and beverages to 1 percent from the current 8 percent for two years starting next April, as households continue to struggle with high prices.
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