Japan's government has decided to reduce the consumption tax on food from 8% to 1% for two years starting April 2027, a move projected to create an annual fiscal shortfall of 5 trillion yen and 10 trillion yen over the policy's lifespan.
Prime Minister Sanae Takaichi pledged to protect social security funding despite the revenue loss, while Finance Minister Satsuki Katayama said the government would secure alternative revenue sources and revise expenditures before finalizing a funding plan by December. The tax reduction would save households earning under 2 million yen roughly 46,000 yen annually, with higher earners saving up to 88,000 yen per year.
Shiga Governor Taizo Mikazuki said the cut would cost his prefecture and municipalities 10.3 billion yen annually and questioned whether rates could realistically be raised again after two years. Sanseito party leader Sohei Kamiya called the policy "foolish", arguing it would complicate tax procedures and urging a uniform 5% reduction instead.