Takaichi’s fiscal push could lift growth - and Japan’s already-rising interest bill
Japanese Prime Minister Sanae Takaichi is pushing for a significant cut to the consumption tax on food, aiming to stimulate economic growth despite internal party opposition and warnings from the IMF. Critics argue the plan could weaken the yen and undermine Japan's fiscal stability.
Why it matters
The policy represents a high-stakes economic gamble that could either revitalize Japanese consumer spending or exacerbate the country's existing fiscal and currency challenges.
Japanese Prime Minister Sanae Takaichi has pushed forward with her plan to slash the consumption tax on food, which reportedly would be the first time the tax will be cut since its implementation in 1989 if she succeeds. On Tuesday, the ruling Liberal Democratic party advanced the bill through key committees, with Nikkei reporting Takaichi wants cabinet approval by this month, and for the bill to be tabled in parliament in the autumn.
Takaichi said last Thursday that Japan would cut the tax on food to 1% from 8% for two years from April 2027, and offer cash payments to offset the impact of that 1% on select groups.
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