Japan's Liberal Democratic Party formally approves the food consumption tax reduction plan, to be implemented in April 2027, with an estimated fiscal shortfall of about 5 trillion yen.

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The General Council of Japan's ruling Liberal Democratic Party unanimously approved Prime Minister Sanae Takaichi's large-scale consumption tax reduction proposal on Wednesday, paving the way for the cabinet's official endorsement later that day. The plan is expected to be implemented from April 2027 following deliberation in a special session of parliament.

According to the plan, Japan's food consumption tax rate will be sharply cut from the current 8% to 1% within two years, and the government will additionally provide a rebate or subsidy equivalent to 1%, effectively making food purchases “zero tax burden”.

As a key policy to ease the pressure from rising household living costs, the tax reduction is expected to lead to a fiscal revenue shortfall of about 5 trillion yen (approximately $31.72 billion), further increasing the government's pressure to explain the source of funds to the public and intensifying concerns about Japan's already strained fiscal position.

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Japan's Liberal Democratic Party formally approves the food consumption tax reduction plan, to be implemented in April 2027, with an estimated fiscal shortfall of about 5 trillion yen.

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