Japan to Cut Food Consumption Tax to 1%

Prime Minister Takaichi announced that Japan will lower the consumption tax on food from eight percent ^[1] to one percent ^[2].

The move aims to combat rising prices and reduce the financial burden on low-income households during a period of significant inflation. By pairing the tax cut with targeted cash transfers, the government intends to make the effective tax burden on food zero ^[3].

The policy is scheduled to run for two years, beginning in April 2026 and ending in March 2028 ^[4]. Takaichi said the reduction of the food consumption tax rate to one percent will be advanced for two years starting in April of the ninth year of Reiwa.

To ensure the lowest-income citizens are supported, the government will provide benefits equivalent to the one percent tax amount ^[1]. Takaichi said that as the government fully introduces detailed benefits linked to income starting in April of the 11th year of Reiwa, the food consumption tax rate will return to its original eight percent ^[1].

Addressing the cost of the program, the prime minister said that the government will not use deficit-financing bonds to fund the initiative ^[1]. Instead, the administration will secure the necessary funds by reviewing tax exceptions, adjusting subsidies, and utilizing non-tax revenues ^[1].

The announcement took place during a Liberal Democratic Party extraordinary officers' meeting held at the Prime Minister's Official Residence ^[2]. Takaichi said the policy is designed to provide immediate relief to citizens struggling with the cost of living.

While most reports align on the start date, some sources have listed the beginning of the tax cut as April 2027 ^[5]. However, the primary government and news directives indicate the April 2026 start date ^[2], ^[4].