Sanae Takaichi outlines Japan growth strategy and tax cuts

Japanese Prime Minister Sanae Takaichi delivered a policy speech to the Diet outlining an economic agenda focused on growth and regional revitalization. A central pillar of her proposal is a temporary reduction of the consumption tax on food from 8% to 1% for two years, starting in April 2027. While framed as relief for households, critics warn the move could create a 10 trillion yen revenue gap and have questioned the lack of a clear funding plan.

The administration plans to implement a ‘Japan Growth Strategy’ by the end of 2026, targeting 17 strategic sectors and 62 products. This includes ‘crisis management investment’ in areas like Green Transformation (GX) and ‘growth investment’ in fusion energy, AI, and semiconductors. The strategy aims to drive private investment and bolster economic security.

On regional development, Takaichi introduced a ‘Regional Future Strategy’ to strengthen local economies, specifically mentioning plans to bolster the economy in Okinawa. The strategy also aims to address labor shortages in logistics and public transport through AI transformation (AX) and to support industrial clusters in various regions.