Japan Cuts Food Tax by 95% Amid Inflation Fears

Japan's government has approved a plan to temporarily reduce the consumption tax on food items from 8% to 1%, starting in April 2027. This measure aims to alleviate the impact of rising living costs caused by persistent inflation, particularly for low- and middle-income households.

The two-year tax cut is part of a broader government effort to provide financial support to struggling families. The legislation includes measures to reduce their tax burden, with an estimated revenue shortfall of 10 trillion yen (approximately $63 billion) over the next two years.

Prime Minister Sanae Takaichi emphasized that this decision is temporary and transitional, with plans to restore the tax rate to its previous level after the reduction period ends. The government has also pledged to protect small farmers and the restaurant sector from any potential negative impacts of the tax cut.