Takaichi's Food-Tax Cut Clears LDP Hurdle Amid BOJ Pressure

The Liberal Democratic Party's General Council has unanimously approved Prime Minister Sanae Takaichi's plan to reduce the consumption tax on food from 8% to 1% for two years, starting in April 2027. The government will provide households with payments to cover the remaining 1%, effectively making food tax-free during this period.

The measure is the centerpiece of Takaichi's response to rising living costs and a sharp fall in public support. Food prices have become one of the most politically sensitive issues for the administration, especially as the weak yen continues to raise import costs for households and small businesses.

The tax cut would mark the first reduction in Japan's consumption tax since the system was introduced in 1989. The plan is estimated to create a revenue shortfall of about 5 trillion yen, which the government has pledged not to cover with deficit-financing bonds.