Overview
- Citing a Mainichi report, the government is reportedly considering cutting the current 8% consumption tax on food to 1% for two years starting in April 2027 as a practical alternative to a zero rate.
- Officials favor 1% because major cash-register vendors told a national council that switching to a zero rate would take about one year while a 1% change could be done in roughly half that time.
- The April 2027 start date appears designed to coincide with municipal elections so the measure can be promoted to voters during the campaign period.
- Markets are watching closely because Prime Minister Sanae Takaichi’s January pledge to scrap the food levy briefly pushed up government bond yields and a confirmed cut could revive similar fiscal worries.
- Final details remain unconfirmed and will be negotiated between ruling and opposition parties with the national council continuing talks as officials consider costs of roughly ¥4 trillion a year and options such as a ¥600 billion subsidy for register upgrades.