Japan Cuts Food Tax to Ease Inflation Pressures

Japan's government has announced plans to temporarily reduce its consumption tax on food from 8% to just 1% starting next April. This move is aimed at easing cost-of-living pressures in the world's fourth-largest economy, which have been rising due to the war in the Middle East and a weak yen.

The current sales tax rate will be reduced for two years, after which it will return to 8% in 2029. This reduction is estimated to cost around $61 billion in lost tax revenues, according to media reports.

Japanese Prime Minister Sanae Takaichi has stated that her administration will explore ways to make up for the lost revenue, including reassessing other tax relief measures and subsidy programs. The government aims to secure funding without relying on special government bonds, in order to gain market confidence.