Takaichi says food tax cut is temporary, to be restored after two years

2026-06-22

Prime Minister Sanae Takaichi said on the 22nd that she intends to restore the consumption tax rate on food items to its original level two years after lowering it to 8%. She said it is positioned as a bridge until the introduction of a refundable tax credit, the core of the reform.

Temporary consumption tax measure

The prime minister made the remarks in response to Kenta Tanaka of the Democratic Party for the People at the House of Representatives Budget Committee. The chair of a bipartisan national conference on social security has proposed setting the rate at 1% for two years from April 2027.

Internal Affairs and Communications Minister Yoshimasa Hayashi said at the same committee that local governments would lose about 1.6 trillion yen under that plan. Broken down by rounded figures, 1 trillion yen would come from the local consumption tax and 0.7 trillion yen from local allocation tax grants.

The prime minister said a system is needed that would allow cash registers to be quickly updated according to circumstances. On household support, she said it would be difficult if the government could not flexibly adjust the consumption tax rate and provide relief when a major disaster or infectious disease occurs.

Call for BOJ policy management

The prime minister also called for close coordination between the government and the Bank of Japan. In response to an প্রশ্ন from Ishinobu Sugawara of the Liberal Democratic Party, she said she expects the BOJ to conduct appropriate monetary policy management to achieve the 2% price stability target in a sustainable and stable manner.

She also referred to the fact that wage increases in the 2026 spring labor negotiations exceeded 5% for the third consecutive year. She stressed that the government will do everything possible to translate that into higher pay for small and midsize companies and regional businesses, and said it will fundamentally strengthen earning power, citing measures such as promoting fair transactions between large companies and subcontractors.

She also explained the launch of negotiations on an economic partnership agreement with Mercosur, the South American common market made up of five countries including Brazil. Referring to concerns in domestic production sites, including agriculture and livestock, she said she had conveyed them to Brazilian President Luiz Inacio Lula da Silva. She said Japan would enter the negotiations with a strong resolve to firmly protect the country's national interest.

Defamation video allegation and SDF deployment

Economy, Trade and Industry Minister Ryosei Akazawa said the government will launch a mechanism allowing construction companies to buy thinner directly from manufacturers, as supply has tightened due to the situation in the Middle East. He also referred to toluene, a raw material, as part of a mechanism to significantly expand supply, and said he expects it to help curb price increases.

Separately, Yuichi Goto of the Democratic Alliance for the People questioned allegations that the prime minister's camp created a defamatory video during the LDP leadership race. The prime minister said she wants to submit a written statement on her secretary's explanation to the House of Representatives Budget Committee steering committee in the coming days and use that in place of a formal reply.

The prime minister said that if only part of the story is taken out, the full picture is not clear and it causes confusion. She added that unfortunately she is no longer able to secure working time as prime minister. She also said she would not prejudge the possible dispatch of the Self-Defense Forces for mine-clearing operations in the Strait of Hormuz in the Middle East, adding that there is no change to the policy of considering necessary measures within the scope of international and domestic law.

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