Report
Japan approves plan to cut food tax to 1% from April 2027, but funding undecided
Japan's government has approved a tax reform package that would cut the 8 percent consumption tax on food and nonalcoholic beverages to 1 percent for two years starting in April 2027. The legislation still needs parliamentary approval, and the government has yet to spell out how it will cover a shortfall estimated at roughly 10 trillion yen.
The government approved the package on Tuesday, according to Kyodo News. If it takes effect as planned, it would be Japan's first consumption tax cut since the system was introduced in 1989, and it would apply for two years from April 2027.
For anyone planning a trip or living here, the visible effect would be at the till: food and nonalcoholic beverages would carry a much smaller tax than the current 8 percent. But this is not yet law. The government plans to submit related legislation to parliament during an extraordinary session expected to convene in October, and the measure is expected to face parliamentary debate, with opposition parties having raised concerns in a multiparty social security council. Retailers will begin full-fledged preparations, including cash register system upgrades.
The money question is unresolved. Finance Minister Satsuki Katayama said the government will not count on deficit-financing bonds to cover the revenue shortfall, estimated at roughly 10 trillion yen ($65 billion), and will outline its funding plan by the end of this year. She said funds would be secured "without relying on special deficit-financing bonds to maintain market confidence." The source notes that investors are increasingly concerned about Japan's fiscal health as the Takaichi government aims to boost growth through aggressive spending.
The package also calls for an income-based benefit for low- and middle-income earners starting in fiscal 2027, with payments totalling about 600 billion yen per year in fiscal 2027 and 2028, equivalent to the revenue from the remaining 1 percentage point of the consumption tax that will not be cut. Cash handouts would be expanded from fiscal 2029, though details such as eligibility and the amount have yet to be determined. The ruling Liberal Democratic Party and its coalition partner, the Japan Innovation Party, also pledged support for small farmers and restaurants, which are expected to face revenue declines.
Source details and supporting facts
Each line is stated by the page named above it.
Stated by english.kyodonews.net
- The government approved a tax reform package that would cut Japan's 8 percent consumption tax on food and nonalcoholic beverages to 1 percent for two years starting in April 2027.
- It will be Japan's first consumption tax cut since the system was introduced in 1989.
- The tax revenue shortfall is estimated at roughly 10 trillion yen ($65 billion).
- Finance Minister Satsuki Katayama said the government will not count on deficit-financing bonds to cover the shortfall and will outline its funding plan by the end of this year.
- The government plans to submit related legislation to parliament during an extraordinary session expected to convene in October.
- Retailers will begin full-fledged preparations, including cash register system upgrades.
- The package calls for an income-based benefit for low- and middle-income earners starting in fiscal 2027, with payments totalling about 600 billion yen per year in fiscal 2027 and 2028.
- Details such as eligibility and the amount of the handouts have yet to be determined.
Sources
- Kyodo News (English)Text stored 15 September 2026
How this story was checked. Written from the 1 page listed above, stored 15 September 2026; claims checked against that stored text on 15 September 2026.
What that means
- 8 of 8 reported statements were confirmed against the page that carries them; the rest were removed rather than published.
- Figures in the text were required to appear in the stored source text: yes. Identifiers: yes.
- The check reads stored text only: no claim rests on a fresh look that did not happen.
- Where the reporting was silent, the text says so instead of filling the gap.