The cabinet approved legislation to cut the consumption tax on food and drink from 8 percent to 1 percent for two years and to add an income-linked benefit.
Japan's cabinet on Friday approved a bill to cut the consumption tax on food and drink and to introduce an income-linked cash benefit, Kyodo News reported. The food and drink rate would fall from 8 percent to 1 percent for two years from April.
Kyodo said it would be the first cut since the consumption tax was introduced in 1989. The government wants the bill enacted in the current extraordinary Diet session, which runs through 12 December. Jiji Press reported the same cabinet step and the same two-year window from fiscal 2027.
About 10 trillion yen, roughly 63 billion dollars, is expected to be lost in tax revenue over two years, Kyodo reported. Finance Minister Satsuki Katayama said the government will identify funding sources in the coming budget process.
Prime Minister Sanae Takaichi has described the measures as a way to help households facing inflation. The cabinet had approved the plan in August, and a tax-reform package followed in September. Friday's step is adoption of the bill, not Diet passage.
No vote tally was reported. The funding method remains to be set in the budget drafting process, according to Katayama's comments as carried by Kyodo.
People Sentiments Mixed
- Sanae Takaichi has said the measures are a way to help households facing inflation.
- Satsuki Katayama said funding sources will be identified in the budget process.