Japanese Prime Minister Sanae Takaichi is pushing for legislation that would temporarily cut the country’s consumption tax on food from 8% to 1%, but the measure could face difficulties passing parliament because her ruling coalition lacks a majority in the upper house.
Takaichi said she wants the government to deliver tangible results during the extraordinary Diet session expected to begin on Oct. 5. The proposed legislation would reduce the consumption tax on food products to 1% for two years, beginning next April.
The government has said the lost revenue would be covered through reviews of government spending and revenues rather than deficit-financing bonds. Takaichi has also said the government has a plan to secure the resources needed for the measure while maintaining fiscal sustainability.
The political challenge is the composition of parliament. The ruling coalition led by Takaichi’s Liberal Democratic Party does not hold a majority in the House of Councillors, meaning the government will need support from opposition parties to secure passage of legislation. Takaichi said she wants to hold discussions with opposition parties and seek broader cooperation where there is agreement.
The proposed reduction is part of Takaichi’s broader effort to ease the financial pressure facing households amid elevated prices. The government has separately outlined a future benefit program for low- and middle-income households after the temporary food-tax reduction ends.
The plan has also drawn attention from financial markets because Japan is simultaneously preparing a large fiscal program. Budget requests for fiscal 2027 have reached a record ¥143 trillion, while the government is seeking to balance spending on growth and resilience with efforts to control debt.
Takaichi has said the food-tax reduction will be funded without issuing deficit-financing bonds and that the government will review both expenditures and revenues as part of its budget reforms. The government has not yet provided every detail of how the two-year measure will be financed.
With the extraordinary Diet session approaching, negotiations with opposition parties will be central to the fate of the tax-cut legislation. The proposal is now moving from a government policy commitment into a parliamentary test over household relief, taxation and Japan’s fiscal position.
