Sanae Takaichi Plans Food Tax Cut to Boost Growth

Sanae Takaichi is advancing a plan to reduce the consumption tax on food from 8% to 1% for two years beginning in April 2027. The ruling Liberal Democratic Party moved the bill through key committees on Tuesday, with the prime minister seeking cabinet approval this month and parliamentary tabling in the autumn.

The tax reduction is paired with a 370 trillion yen public-private investment plan extending through 2040, intended to stimulate economic growth and consumer spending. However, the proposal has met internal resistance from Liberal Democratic Party members Taro Kono and Takeshi Iwaya.

External critics and financial analysts warn that the measure may weaken the yen, increase import prices, and raise interest rates. The International Monetary Fund specifically cautioned that the proposal is an untargeted measure that could erode fiscal space and increase risks for Japan's public debt, which is projected to reach roughly 204% of GDP in 2026.