Japan plans two‑year food tax cut to 1% from 2027

Japan is considering a temporary reduction of its food consumption tax from the current 8% to 1% for a two‑year period beginning in April 2027. The proposal is intended to ease cost‑of‑living pressures on households and to boost consumer confidence ahead of municipal elections scheduled for the same month. Prime Minister Sanae Takaichi first pledged to eliminate the levy in January, a move that triggered a spike in government bond yields as investors weighed the fiscal impact. Officials say a 1% rate is more practical than a zero rate because it avoids costly upgrades to point‑of‑sale systems. The exact details will be negotiated between the ruling and opposition parties, with the tax revenue remaining crucial for funding Japan’s social‑welfare programmes in an ageing society.