Japan Cuts Sales Tax on Food Amid Inflation Pressures

Japan's Prime Minister Sanae Takaichi has announced plans to temporarily cut the sales tax on food from eight percent to one percent starting next April. This move aims to ease cost-of-living pressures in the world's fourth-largest economy, which has been rising due to the war in the Middle East and a weak yen.

The reduction will be the first of its kind since the tax was introduced in 1989, and the rate will return to eight percent after two years. Takaichi estimates that this move will cost 10 trillion yen ($61 billion) in lost tax revenues.

While the cut is intended to help low-income workers, it comes despite concerns over Japan's colossal debts, which are more than twice the size of its gross domestic product, the highest ratio among advanced economies. The government plans to explore steps like reassessing other tax relief measures and subsidy programmes to make up for the lost revenues.