Prime Minister Sanae Takaichi of the Liberal Democratic Party will instruct party officials later this week to finalize a plan reducing food consumption tax [1].
The policy aims to alleviate the financial burden on households facing rising food prices while ensuring direct financial support for the lowest earners.
Takaichi intends to lower the current consumption tax rate on food from eight percent [1] to one percent [1]. Under the proposed framework, the 600 billion yen [1] generated from the tax adjustment will be distributed as benefits to low- and middle-income citizens [1].
The administration plans to implement these changes starting in April 2027 [1]. The tax reduction is intended to last for a period of two years [1].
To achieve this timeline, the government expects to submit the necessary legislation during the extraordinary Diet session in autumn 2026 [2]. This move follows previous campaign pledges from February 2026, where some platforms suggested a total elimination of the food tax, though the current policy settles on a one percent rate [1, 2].
Government officials said the measure is a targeted response to inflation. By shifting the tax burden and providing direct cash transfers, the administration seeks to stabilize domestic consumption without triggering broader economic instability. The instruction to LDP executives is expected to be issued in the latter half of the week of July 27 [1].
“Prime Minister Sanae Takaichi will instruct party officials later this week to finalize a plan reducing food consumption tax.”
This policy represents a strategic shift toward targeted fiscal relief. By opting for a 1% tax rate rather than a total exemption, the Takaichi administration maintains a baseline tax structure while using the 600 billion yen as a social safety net. The move is designed to counter the political pressure caused by food inflation and provides a measurable benefit to the electorate ahead of the 2027 implementation.
