Planned Food Tax Cut Faces Implementation Challenges

Tokyo, April 29 (Jiji Press)--Japan's nonpartisan National Council on Social Security is discussing challenges over a planned consumption tax cut for food items, including when to introduce the step.

Although Prime Minister Sanae Takaichi aims to implement a two-year food tax rate reduction to zero pct within fiscal 2026, it would take a year to make cash register systems compatible with a zero pct tax rate.

Some are calling for implementing a tax rate of 1 pct instead of fully shelving the tax, so that the system updating process becomes easier. Others are proposing scrapping the tax cut plan altogether, which is regarded as a stopgap measure before introducing a refundable tax credit system.

In February, Takaichi's ruling Liberal Democratic Party won a landslide victory in the general election for the House of Representatives, the all-important lower chamber of the Diet, the country's parliament, by pledging to accelerate discussions on a zero consumption tax rate on food items for two years.

Her administration then set up the national council and began hearings with relevant groups, during which challenges associated with the planned tax cut came to the surface.

[Copyright The Jiji Press, Ltd.]