Japan's lower house opens debate on bill cutting food consumption tax to 1%

A government bill to cut the consumption tax on food and beverages entered deliberation in the House of Representatives plenary session on the afternoon of 20 October. Mainichi said it is the first time since the consumption tax was introduced in April 1989 that the Diet has debated a tax cut. The government plans to lower the rate on food and beverages from 8% to 1% for two years from April 2027, and the ruling parties aim to enact the bill by 12 December, the end of the session. [ 14 ]

The bill also contains a new income-linked payment for working people, called the worker burden reduction support payment. Mainichi said it would start in fiscal 2027 and 2028 with 600 billion yen a year, the amount corresponding to the 1% tax rate, and become full-scale from fiscal 2029 with permanent funding and higher amounts. The amount and the income range of eligible recipients are to be set by cabinet order, Mainichi said. Yomiuri reported that Takaichi told the plenary session the reference figure was payments to about 20 million people with an income cap of 3.5 million yen. [ 14 , 34 , 36 ]

Opposition parties have pressed the government on where the money will come from. Mainichi said the cut requires 5 trillion yen a year and that specifics on financing and on support for affected businesses have not been shown. Takaichi has ruled out deficit bonds and said the money would be secured by reviewing both spending and revenue. In the upper house budget committee on 19 October she said unneeded long-idle funds would be returned to the national treasury, and TBS reported she indicated that a review of tax special measures and higher-than-expected tax revenue could be used. [ 1 , 4 , 14 ]

Several opposition parties are shifting toward cash payments. Komeito has put together a proposal to give about 80,000 yen per person over two years, and its secretary-general, Nishida, said on 16 October that the party cannot agree to the bill as it stands. The Democratic Party for the People proposed relief of about 50,000 yen a year through income and resident tax cuts and payments to low earners. The Constitutional Democratic Party decided on 7 October to move away from a 0% rate on food toward cash payments. Takaichi has said the consumption tax cut is the best method in terms of sufficiency and speed of support. [ 1 , 2 , 5 ]

The ruling parties have more than three-quarters of lower house seats but are short of a majority in the upper house, so they may seek to take in some opposition demands. Nippon TV reported that the Japan Conservative Party has said it supports the bill, while Democratic Party for the People leader Tamaki said he is not opposed from the outset and could reconsider if the content improves. The government and ruling parties aim to pass the lower house by early November. [ 1 , 2 , 13 , 14 ]

Separately, Takaichi said in the upper house on 19 October that premium vouchers and Go To Eat are among the options for supporting restaurants, whose tax rate is to stay at 10%. A government official told TBS that support would be pinpointed at shops competing with takeout and that uniform support is not currently planned. Former prime minister Ishiba questioned whether such vouchers would raise demand. [ 4 , 6 , 22 ]