Japan To Slash Food Sales Tax Amid Inflation

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Tokyo: Japan will temporarily slash its consumption tax on food and beverages from eight percent to one percent starting next April to help households cope with persistent inflation.

Prime Minister Sanae Takaichi announced the decision on Thursday, marking the first tax reduction of its kind since Japan introduced a sales tax in 1989. 

The temporary relief measure will remain in place for two years before reverting to eight percent in 2029, a transition planned to coincide with targeted subsidies for lower-income workers. Media estimates project the tax cut will cost approximately 10 trillion yen ($61 billion) in lost state revenue, fulfilling a central pledge from Takaichi's February election campaign.

The relief package comes as rising import costs driven by a weak yen and Middle East conflicts weigh heavily on the world's fourth-largest economy. Despite fiscal concerns surrounding Japan’s national debt, which stands at more than double its gross domestic product Takaichi assured that her administration will reassess existing tax relief and subsidies to fund the measure without issuing special government bonds.