Japanese officials proposed a plan Wednesday to effectively eliminate the consumption tax on food through a combination of tax cuts and benefits [1].
The proposal aims to reduce the financial burden on low- and middle-income households by providing direct living support [1, 2].
On June 17, the National Council meeting featured a proposal from the council chair, Onodera, who also serves as the Liberal Democratic Party tax commission chairman [1, 2]. The plan involves lowering the consumption tax rate on food items to 1% [1].
This tax reduction is scheduled to begin April 1, 2027, and will remain in effect for two years [1]. To achieve a virtual zero-tax environment, the government intends to cover the remaining 1% through income-linked benefits [1].
According to the proposal, these benefits are expected to be introduced during the 2026 fiscal year [1]. The strategy seeks to provide immediate relief to consumers while maintaining a structured tax framework.
Representatives from the Komeito party and the Centrist Reform Alliance also participated in the discussions [1, 2]. The National Council, which held its first meeting on Feb. 26, 2026 [3], continues to evaluate methods to mitigate the cost of living for Japanese citizens [1, 2].
While some reports describe the initiative as a move toward a total zero-tax period for food [3], the official chair's proposal specifies the 1% rate combined with targeted payouts [1].
“effectively eliminate the consumption tax on food through a combination of tax cuts and benefits”
This hybrid approach allows the Japanese government to provide the economic relief of a tax holiday without completely dismantling the consumption tax infrastructure. By utilizing income-linked benefits to cover the final 1%, the state can more precisely target support toward vulnerable populations rather than providing a flat tax cut that benefits all income brackets equally.
