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<\/a><\/a><\/p>\nPublished Wed, Aug 5, 2026 \u00b7 11:30 AM<\/p>\n
[TOKYO] Japan\u2019s ruling Liberal Democratic Party on Wednesday (Aug 5) signed off on a sweeping consumption tax cut championed by Prime Minister Sanae Takaichi, despite mounting concerns over the nation\u2019s already strained finances.<\/p>\n
The unanimous approval by the LDP\u2019s general council paves the way for cabinet endorsement of the plan later in the day, with implementation targeted for April 2027 following debate in an extraordinary parliamentary session.<\/p>\n
The plan would slash the consumption tax on food items to 1 per cent from 8 per cent for two years, supplemented by an additional 1 per cent rebate or benefit payment that would effectively eliminate the tax burden on food purchases.<\/p>\n
The tax cut, a centrepiece of Takaichi\u2019s efforts to ease the impact of rising living costs on households, creates a revenue shortfall of roughly 5 trillion yen (US$31.72 billion), intensifying pressure on the government to explain how it plans to fund the shortfall.<\/p>\n
Takaichi and other ministers repeatedly said the government will not rely on debt issuance and instead seek to tap non-tax revenues, such as proceeds from state funds and foreign reserves as well as spending reforms.<\/p>\n
The proposed tax cut comes as Japan faces swelling fiscal commitments, including support for a 370 trillion yen public-private investment strategy through fiscal 2040 and likely higher defence spending following revisions to Japan\u2019s national security strategy.<\/p>\n
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