Itsunori Onodera, chairman of the Liberal Democratic Party's tax research committee, has proposed a plan to effectively eliminate the consumption tax on food [1].
The proposal aims to reduce the financial burden on low- and middle-income households while fulfilling a ruling party pledge to achieve zero consumption tax on food [1].
Under the plan, the consumption tax rate for food items would be lowered to 1% [1]. To reach a practical zero rate, the remaining 1% would be covered through income-linked benefits provided to citizens [1]. This two-step approach is designed to provide immediate relief at the register while ensuring targeted support through the benefit system.
The measure is proposed to take effect on April 1, 2027, and remain in place for two years, covering the 2027 and 2028 fiscal years [2]. The income-linked benefits would be distributed during this same period [1].
Onodera presented the plan during a meeting of a cross-party national council, also known as the Social Security National Council [1]. The initiative seeks to find common ground among political factions with differing views on taxation and welfare.
"As a way to move forward even one step, with multiple political parties that have different opinions gathering, I have made this proposal today as the chairperson," Onodera said [3].
Following this two-year transitional period, the proposal outlines a shift toward a more permanent system. The plan suggests the full-scale introduction of a refundable tax credit system starting in the 2029 fiscal year [1]. This would replace the temporary benefit structure with a formal mechanism for tax relief based on income levels.
“The proposal would lower food consumption tax to 1% and use income-linked benefits to offset the remainder.”
This proposal represents a hybrid approach to tax relief, attempting to balance the administrative simplicity of a flat tax cut with the precision of a means-tested benefit. By avoiding a total tax removal, the government maintains a basic tax infrastructure while using benefits to protect the purchasing power of the most vulnerable citizens against inflation.
