Japan Cross-Party Council Agrees on Food Tax Cut to 1% with Cash Handout for Low-Income
Japan's cross-party National Council on Social Security reached a mid-term summary on food consumption tax reduction, explicitly including the ruling party's plan to cut the rate to 1% from April 2027 for two years. The plan also provides 600 billion yen annually to low- and middle-income individuals, achieving an effective zero rate. The summary mentions the opposition's priority on cash handouts. Prime Minister Sanae Takaichi will make the final decision.
The working-level meeting of the National Council on Social Security convened at the Diet on the morning of the 29th and reached a mid-term summary on the cross-party discussion of reducing the consumption tax on food and beverages. The summary explicitly includes the ruling party's plan to lower the rate to 1% for two years from April 2027, while also mentioning the opposition's stance prioritizing cash handouts.
Prime Minister Sanae Takaichi and relevant cabinet ministers attended a main meeting at 3 p. m. on the 29th, where the mid-term summary was reported and the final decision on the tax cut was delegated to the prime minister. With this, the National Council has temporarily concluded its discussions. The chair of the working-level meeting, Itsunori Onodera, who also heads the Liberal Democratic Party's tax system research commission, disclosed the details. The LDP is coordinating to hold a temporary executive meeting on the 30th, where the prime minister, as party president, is expected to instruct party executives to compile opinions on the tax cut.
Under the ruling party's plan, alongside the consumption tax reduction, 600 billion yen per year—equivalent to 1% of tax revenue—will be distributed to low- and middle-income earners, achieving an effective zero rate. After the tax cut ends in fiscal 2029, a new income-linked benefit system will be formally introduced, an agreement reached between the ruling and opposition parties. An expert panel comprising tax and social security specialists also met on the 29th and approved a summary on the new benefit system.