Japan to Cut Food Sales Tax to 1% for Two Years Starting April 2027

Prime Minister Sanae Takaichi announced that Japan will lower the consumption tax on food and beverages from the current 8 % to 1 % for a two-year period beginning in April 2027. The reduction is framed as a “transitional measure” intended to ease household budgets amid persistent inflation. After the two-year term, the tax is slated to revert to its original rate, a timeline Takaichi linked to fiscal sustainability.

Wall Street Journal

Japan’s consumption tax, introduced in 1989, has risen from 3 % to 5 % in 1997 and to 8 % in 2014 to fund an expanding social-security system. The proposed cut would create a revenue shortfall estimated at about 10 trillion yen over the two years, while cash handouts to low- and middle-income households are projected at 600 billion yen annually, roughly matching the revenue that a 1 % tax would generate. Analysts note that the loss could intensify concerns about Japan’s fiscal health, already strained by high government-bond yields and a weak yen.

Japan Today

LDP Secretary General Shunichi Suzuki reported that senior party officials have approved the plan and that related legislation is expected to be presented in an extraordinary Diet session later in the year. The junior coalition partner, the Japan Innovation Party, also voiced support.

Japan Today

Former Foreign Minister Taro Kono warned that the tax cut offers no guarantee of lower food prices and could trigger a sharp price spike when the rate is reinstated. Former LDP election-strategy chief Yuko Obuchi resigned from an informal research commission in protest, citing a need for fiscal discipline. Their objections highlight a split within the ruling bloc over the balance between immediate household relief and long-term fiscal balance.

Japan Today

• “From the perspective of achieving fiscal sustainability and securing market confidence, I will take personal responsibility to ensure the tax rate is restored to its original level after two years,” — Sanae Takaichi, prime minister

Wall Street Journal

• “I will take full responsibility for restoring the tax rate to its original level two years after (implementing the cut) to ensure fiscal sustainability and maintain market confidence.” — Sanae Takaichi, prime minister

Japan Today