Japan's government approves food consumption tax cut

Japan's government has decided to lower the consumption tax on food to 1 percent for two years from April 2027. It currently stands at 8 percent.

The government approved the policy at an extraordinary Cabinet meeting on Wednesday. In addition, benefits will be provided to make the tax effectively zero for low- and middle-income earners. The policy said the government will review all spending and revenue streams, such as subsidies and special tax breaks, as well as non-tax incomes, to secure the necessary funding. It will not rely on deficit-covering bonds. After the two-year tax cut, a new income-linked benefit will be introduced from fiscal 2029 that will provide handouts according to each person's income.