Japan to slash food consumption tax to 1% in 2027, adding income support
The Japanese government approved a plan to reduce the 8% consumption tax on food and non-alcoholic drinks to 1% for two years starting April 2027, while introducing cash benefits for low- and middle-income households.
Japan’s cabinet gave the green light to a tax reform agenda that will lower the 8% consumption tax on food and non-alcoholic beverages to 1% for the first two years of the fiscal period beginning in April 2027. The government estimates the cut will forfeit about 10 trillion yen in revenue, a shortfall it does not plan to cover with deficit-financing bonds. To compensate, a new cash benefit for low- and middle-income earners will be introduced, costing around 600 billion yen annually in fiscal 2027 and 2028, with the program set to expand from fiscal 2029.
Prime Minister Sanae Takaichi intends to present the legislation during an extraordinary parliamentary session expected in October, with backing from the ruling Liberal Democratic Party and its coalition partner, the Japan Innovation Party, which highlighted support for small farmers and restaurants. Retailers are already preparing for system upgrades required by the tax change. The proposal will face debate, as opposition parties have voiced concerns in a multiparty social security council.
Why it matters
The tax cut aims to ease living costs for consumers while the cash benefit seeks to offset lost government revenue.
How the sides frame it
LOW AGREEMENTLeft-leaning coverage emphasizes the government's plan to slash the food consumption tax to 1% and introduce cash benefits for low- and middle-income earners, while centrist coverage highlights the modest savings from a budget-efficiency drive and ministries’ reluctance to cut spending.
LEFT
Frames the story as a major tax-cut initiative paired with new income support for households
CENTER
Frames the story as a modest cost-cutting effort that yields only limited savings and shows little enthusiasm from ministries
The left emphasises
- lower the 8% consumption tax on food and non-alcoholic beverages to 1% for the first two years
- introduce a new cash benefit for low- and middle-income earners costing around 600 billion yen annually
- the cut will forfeit about 10 trillion yen in revenue
In this story
