FX.co ★ Japan Food Sales Tax Set at 1% Under Takaichi’s Proposal

Japan is planning to temporarily cut its sales tax on food and beverages to 1% for two years, Bloomberg reported. The government opted for a low positive rate rather than a full exemption to avoid the costly and time-consuming process of reprogramming retailers’ cash registers. Officials estimate that implementing a 0% rate would take about a year, while introducing a 1% rate could reduce that timeframe by roughly half. The measure, slated to take effect in April 2027, still requires legislation and approval by the Diet (parliament), with draft legislation expected to be submitted during an extraordinary session in autumn 2026. Policymakers hope the tax cut will help ease pressure on household finances, but economists caution that retail prices may not fall as much as anticipated, potentially limiting the relief for consumers.