Cabinet approves consumption tax reduction bill of 1% from next spring to be debated in extraordinary Diet session

At a cabinet meeting on the 9th, the government approved a bill to reduce the consumption tax on food products and introduce a benefit system linked to income. As a "temporary" measure to combat rising prices, the consumption tax rate will be lowered from the current 8% to 1% for two years starting April 2027. The bill will be submitted to the extraordinary Diet session that is currently in session, with the aim of having it enacted by the end of the session on December 12th.

Prime Minister Takaichi fails to see any points of contact with consumption tax cut, gives "zero answer" to opposition parties

This is the first tax rate reduction since the consumption tax was introduced in 1989. Including the consumption tax cut and benefits, approximately 10 trillion yen of financial resources will be needed over two years. The bill clearly stated that ``there will be no reliance on special public bonds (deficit bonds),'' but specific discussions were left to next year's budget formulation at the end of the year.

The ``Employee Burden Reduction Support'', a new benefit to be introduced in conjunction with the consumption tax cut, targets middle- and low-income workers, and is paid once a year in principle. The government aims to introduce benefits funded by the equivalent of 1% of the consumption tax rate in fiscal 2027 in advance, and in line with the administration's pledge to reduce the consumption tax to ``virtually zero,'' full-scale introduction will begin in fiscal 2029. The bill stipulates that the specific income levels and payment amounts to be covered will be ``determined by cabinet order,'' and postpones final decisions on the details.