Arabic version: خفض ضريبة الغذاء في اليابان يثير مخاوف بشأن التكلفة المالية
According to Cnbc, Prime Minister Sanae Takaichi is pursuing a plan to cut Japan’s consumption tax on food to 1% from 8% for two years starting in April 2027. The proposed reduction, coupled with cash payments to offset the remaining 1% for select groups, would reduce annual government revenue by an estimated 4.4 trillion yen. The ruling Liberal Democratic Party advanced the bill through key committees on Tuesday, and Takaichi reportedly wants cabinet approval this month before the measure is tabled in parliament in the autumn.
The food-tax proposal is part of a broader wager that stronger consumption and a 370 trillion yen public-private investment plan through fiscal 2040 can lift productivity, growth and tax revenue. Takaichi has said deficit-financing bonds will not be used, with the government instead planning reviews of spending, tax breaks, subsidies and public funds. Details of those funding measures remain scarce.
Critics within the Liberal Democratic Party and the International Monetary Fund have raised concerns about the loss of fiscal space. Former defense minister Taro Kono warned the plan could undermine confidence in Japan’s fiscal position, raise interest rates and weaken the yen. The IMF said in its 2026 country report that cutting the consumption tax would be an “untargeted measure that would erode fiscal space and add to fiscal risks.” The IMF projects Japan’s government debt at roughly 204% of gross domestic product in 2026.
Borrowing costs are already increasing. Japan’s 10-year government bond yield was around 2.85% in Tuesday trading, near multi-decade highs, while debt-servicing costs account for about a quarter of the fiscal 2026 budget. Interest payments are projected to rise from 13 trillion yen in fiscal 2026 to 21.6 trillion yen in fiscal 2029 under the Finance Ministry’s 3% nominal-growth scenario. Still, analysts said higher yields could attract domestic buyers, including life insurers, while investment that improves productivity and expands the tax base could make the debt burden more manageable.
