The cabinet of Prime Minister Sanae Takaichi cleared a bill to cut the tax on food and drink from 8 percent to 1 percent for two years and to add an income-linked cash benefit.
Japan's cabinet on Friday approved a bill to cut the consumption tax on food and drink and to pay an income-linked benefit to lower earners, Kyodo News reported. The government wants the Diet to pass the bill in the current extraordinary session, which runs through 12 December.
The tax on food and drink would fall from 8 percent to 1 percent for two years from April. Jiji Press described the same cut as applying from fiscal 2027, which starts next April. Both outlets said it would be the first cut since the consumption tax was introduced in 1989.
Prime Minister Sanae Takaichi has said the package is the fastest way to help households facing inflation. Kyodo said about 10 trillion yen, roughly 63 billion dollars, in tax revenue is expected to be lost over two years. Jiji put the combined cost of the tax cut and the benefit program at about 10 trillion yen over the two years.
Finance Minister Satsuki Katayama told a press conference that the government will identify funding sources in the coming budget process, Kyodo reported. The cabinet had approved the tax-cut plan in August, and a tax-reform package followed in September. Friday's step turns that package into legislation.
The bill is not yet law. Passage depends on the Diet before the session ends on 12 December.
People Sentiments Mixed
- Sanae Takaichi has said the measures are the best way to help people facing inflation quickly.
- Satsuki Katayama said the government will identify funding sources in the budget process.