Key facts
- Japan's Prime Minister Sanae Takaichi has ordered preparations for a temporary sales tax cut on food.
- The current 8% consumption tax on food would be reduced to 1% for a period of two years.
- The measure is intended to help cushion the impact of rising living costs for consumers.
- The plan is expected to be finalized in early August and legislation submitted in the autumn parliamentary session.
- This temporary tax cut precedes a new payout system for low and middle-income households.
Japanese Prime Minister Sanae Takaichi has instructed the ruling Liberal Democratic Party (LDP) to begin preparations for a temporary reduction of the sales tax on food items. The proposal, which aims to alleviate the impact of rising living costs, would cut the current 8% consumption tax on food to 1% for a period of two years, effective from April next year. This move is seen as a precursor to a new payout system targeting low and middle-income households. The LDP's tax panel will now discuss the plan, with the government expected to finalize it in early August and submit relevant legislation to parliament in the autumn. The proposal has faced some opposition due to concerns about its impact on Japan's already strained public finances, as the administration has yet to detail how the revenue shortfall will be addressed.