Japan proposes 1% consumption tax on food for two years starting 2027

The Japanese government is considering a temporary reduction of the consumption tax on food to 1 percent for a two‑year period beginning in April 2027. The plan, announced in June, is part of a broader effort to ease the tax burden on households while the administration searches for a sustainable financing method that avoids special‑purpose debt.

Alongside the rate cut, officials have discussed introducing a modest income‑linked cash benefit in the next fiscal year to further offset costs for low‑income families. Debate continues within the ruling party and between parties about the feasibility of a “zero‑rate” approach and the source of funding, with the prime minister emphasizing that any financing must not rely on special bonds. The proposal reflects a consensus among most parties on lowering the tax burden, but disagreements persist over the exact design and fiscal implications.