Japan’s ruling coalition partner to propose sales tax cut on food | Forexlive

Japan’s Komeito party, the junior partner in the ruling coalition, plans to propose lowering the consumption tax on food from 8% to 5% as part of its campaign platform for the July upper house election, according to the Yomiuri newspaper.

The proposal, expected to be officially announced on Friday, also includes cash handouts to help households cope with rising living costs. The stimulus measures would be financed by higher-than-expected tax revenues rather than new government borrowing, the report says.

Japan currently levies an 8% tax on food and 10% on other goods, with the revenue largely used to support social welfare spending in an ageing society.

Komeito’s proposal may increase pressure on Prime Minister Shigeru Ishiba and the main ruling Liberal Democratic Party to boost fiscal support ahead of the vote. However, Ishiba and senior LDP figures have resisted opposition calls for a tax cut, warning it could worsen Japan’s already strained public finances.

Japan PM Ishiba

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