Japan's major opposition party said Friday it wants the consumption tax rate on food items to be scrapped for a year, ahead of a crucial parliamentary election this summer.
The country is bracing for the prospect of persisting inflation and a hit from higher U.S. tariffs, prompting political parties, to a varying degree, to consider the feasibility of reducing the current 10-percent consumption tax to appease voters in the run-up to the House of Councillors election.
Prime Minister Shigeru Ishiba, however, has so far ruled out changing the consumption tax rate, a sensitive and potentially divisive issue, when his public support remains low.
U.S. President Donald Trump's move to slap higher tariffs on imports such as cars, steel and aluminum, has rattled financial markets and cast a pall over the outlook for the export-reliant Japanese economy.
"People today are struggling. We need to face reality," Constitutional Democratic Party of Japan chief Yoshihiko Noda said at a press conference.
"We should be prepared for what Prime Minister Ishiba himself has described as a 'national crisis.' While uncertainty remains extremely high over the U.S. tariff policy...this will deal a severe blow to not only the Japanese economy but the broader global economy as well."
Japan's consumption tax was raised from 8 percent in 2019, but the rate on food and drinks is still 8 percent.
Noda, who as prime minister between 2011 and 2012 spearheaded efforts to raise the consumption tax to cover ballooning social security costs, said he decided on the tax cut this time so as not to contradict his past stance.
The CDPJ will make sure the tax cut is for one year and find an alternative revenue source. It will allow for one extension, depending on economic developments, Noda said.
Consumption, which makes up a large part of domestic demand, has lacked vigor, largely because gains in nominal wages have been canceled out by cost-push inflation.
Besides the CDPJ, the Democratic Party for the People also wants to halve the consumption tax rate to 5 percent as a temporary measure to help struggling households.
In the ruling bloc, Komeito party chief Tetsuo Saito said Thursday that the junior coalition partner of Ishiba's Liberal Democratic Party may aim to cut the consumption tax rate targeting food items when it decides on its campaign platform.
Past prime ministers have sought to balance the need to restore Japan's tattered fiscal health and calls for reduced burdens.
Most of the roughly 90 LDP members of the upper house surveyed by the ruling party are in favor of reducing the consumption tax until wage hikes have outpaced inflation.
Due to an aging society with a declining birthrate, social security expenses account for about a third of the country's state budget.
In the current fiscal year to next March, the government expects around 78 trillion yen in tax revenue, of which 25 trillion yen comes from consumption tax.
© KYODO
25 Comments
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Laguna
In California, there are no taxes on non-prepared food, so those low-income people who cook for themselves pay no sales tax. Japan should adopt a similar system.
WoodyLee
""In California, there are no taxes on non-prepared food, so those low-income people who cook for themselves pay no sales tax. Japan should adopt a similar system.""
Need to mention this:
""California's economy has surpassed Japan's, making the Golden state the fourth largest economy in the world, Governor Gavin Newsom announced on Thursday.1 day ago""
Source:
https://www.theguardian.com/us-news/2025/apr/24/california-economy-japan-gavin-newsom#:~:text=California's%20economy%20has%20surpassed%20Japan's,Gavin%20Newsom%20announced%20on%20Thursday.
WoodyLee
There should be NO CONSUMPTION TAX on all Non - Prepared Foods. Squeezing low income families will only lead to POVERTY.
WoodyLee
""prompting political parties, to a varying degree, to consider the feasibility of reducing the current 10-percent consumption tax to appease voters in the run-up to the House of Councillors election.""
And there you have it " Appeasing Voters " is what election promises is all about, in other words Lie and Lie and Lie till you think it stuck.
fxgai
The yen could plummet fast if this fiscally reckless policy were adopted, smashing low income earners even harder, as it will drive up the cost of imports.
There is no free lunch,
What Japan needs is pro-growth policy - a commitment to sound currency unlike the current inflation promise, spending restraint, deregulation, free trade.
wallace
No sales tax on store food and other items. No sales tax on water, electricity, gas. Increase sales tax on luxury items.
NZ
talk talk talk.
reality may be very different after elections.
remember time when Hatoyama was a PM?
Capuchin
They need to introduce a VAT system. No taxes on essentials, higher taxes on luxury items.
Why is the tax rate on a bag of flour the same as a 50inch 8K TV? It makes no sense.
Aly Rustom
That's an excellent idea.
I agree.
Aly Rustom
another excellent idea
OssanAmerica
Don't do it for just a year. Make it permanent. Same for anything that falls under necessity. If you'r going to tax food and water, you might as well as tax air.
Make up the loss of taxes on necessities by increasing taxes on unnecessary things like cigarettes, alcohol, anything related to gambling including pachinko.
bo
Another ill thought policy with no real substance .When will these old clowns running this place wake up and realise temp stop gaps don't work .
Antiquesaving
Food shouldn't have taxes.
The solution is a simple one.
Remove tax on actual food, by that I mean the basics and necessities, like milk, meat, vegetables, rice, bread ingredients like salt, spices, soup stock, etc...
Then raise the taxes to a 20% on junk food like soda, chips, highly processed foods, snacks but make certain exceptions, example: if you buy 1, 2, or 3 donuts that is snack so 20% tax but seeing you are not really going to make donuts for dessert at home, buy 10 to take home to the family, then no tax, buy a slice of cake: 20% tax, buy a whole cake ( example birthday cake) then no tax.
This encourages people to cook at home and cook more nutritious food avoiding highly processed foods that are not actually good for you.
So instead of people buying soft drinks/soda and paying 20% tax, they can buy 100% fruit/vegetables juice and pay zero tax.
chatanista
It is a temporary tax cut which should be made permanent. Many countries exempt food. Hope Opposition does well in the election so they can push LDP for more concessions like this. LDP would never do it by themselves if they hold a strong majority.
wallace
Antiquesaving
Your sales tax suggestions are far too complicated for store companies to operate. Who decides what is a highly processed food? Way too complicated. What about the small stores, trying to work that out?
Straightforward, no sales tax on any items from a food store will work.
grc
Chatanista has made the most intelligent and on-topic comment here.
Antiquesaving
Strange, that is exactly what is done in Canada!
リッチ
A year? Super market food that is unprocessed should be tax free forever.
fruit vegetables dairy and meat.
frozen, processed food and drinks taxed.
People have a right to food but tax subsidy on bentos junk food or drinks no way. People should cook at home.
fxgai
Which no one will buy and therefore result in paltry revenues.
What is the point of that idea?
fxgai
As for taxing different things at different rates, it's a well intentioned but poor idea - we can handle it better through targeted income support without making the tax system itself complicated and distortionary.
iron man
mmh, on sales tax on food, water, gas electric, sounds just like a place I know well. (that is not a sewer!). larger land rent 'taxes' and rates. let those who can afford property pay their way, much higher gasoline taxes and hit the car purchase taxes hard, if you think a car is essential check out HK FRT and Sgp car first license fees. Cars are the ultimate luxury!
iron man
ooops --no sales tax--
daito_hak
There is nothing complicated about this. Several countries in Europe have low tax rates on fresh food and essentials and regular tax rates on junk and processed food. Japan itself does actually have a lower rate for food since it is at 8% instead of the regular 10%. They could just for example set it at no more than 5% like again in many European countries. So I am not sure what you are talking about here.
vallum
@WoodyLee
Oh, wait. So he's comparing a State with a Country? That's very 'American-thinking', trying to boost their ego and all... (Sorry if I offend someone)
@Antiquesaving
The problem with your idea is that it doesn't really bode well with Japanese working culture.
A lot of people don't really have the time or energy to cook using fresh ingredients everyday. They may use frozen food, for example. Wouldn't that have a 20% tax?
What about people living alone? They can't buy a lot at a time, else the food would go to waste.
kohakuebisu
This is a good policy.
I would go some way toward paying for it by ending taxfree shopping for tourists. They are already getting a really good deal compared to shopping in other first world countries. Taxfree shopping has also led to widespread fraud by criminal gangs of resellers. Limit taxfree to inside airports only.