News On Japan

Japan Weighs 1% Food Tax Cut

TOKYO - A proposal to eliminate Japan’s consumption tax on food for two years, long promoted by Prime Minister Sanae Takaichi, is facing complications, with a reduced 1% tax option now gaining traction within the government due to technical constraints that could delay full implementation.

Takaichi had pledged during the election campaign to accelerate consideration of a temporary zero-percent consumption tax on food items as a bridge toward introducing a tax credit system, outlining a timeline that would see legislation submitted during an extraordinary Diet session this autumn and implementation targeted around spring next year.

However, the plan has encountered an unexpected obstacle: the time required to modify retail systems. Industry experts say updating point-of-sale (POS) systems across major supermarkets to accommodate a 0% tax rate could take up to a year, while a reduction to 1% could be implemented in roughly five to six months after finalizing system specifications.

The issue stems from the design of existing systems, which were built on the assumption that a consumption tax would always apply. Introducing a zero rate requires additional modifications, including changes to receipt displays and backend processes, increasing both complexity and development time. By contrast, maintaining a non-zero figure, even as low as 1%, allows for quicker adjustments within existing frameworks.

The 1% option reportedly gained attention after system vendors indicated during a policy meeting on April 8th that implementation could be completed in as little as three months in some cases, with other firms suggesting timelines of around five months, prompting policymakers to consider the alternative as a way to shorten the rollout period.

The shift has sparked political debate. Nippon Ishin co-leader Hirofumi Yoshimura expressed openness to the 1% proposal, suggesting that strict adherence to a zero rate may not be necessary, while Democratic Party for the People leader Yuichiro Tamaki criticized the move as a reversal of campaign promises, arguing that promoting a 0% tax during elections only to settle for 1% undermines public trust.

Critics have also questioned why the government did not fully assess system limitations before including the zero-tax proposal in its platform, noting that similar concerns had already been raised in parliamentary discussions during the previous administration.

Estimates suggest that the financial impact on households would differ modestly between the two options. According to calculations by Nomura Research Institute, a four-person household would see an annual reduction in food-related tax burdens of approximately 67,000 yen under a 0% rate, compared with about 59,000 yen under a 1% rate—a difference of roughly 8,000 yen per year.

Despite the relatively small gap, the debate highlights a broader dilemma between speed and policy ambition, as the government weighs whether to prioritize rapid relief for households facing rising prices or adhere to its original pledge of eliminating the tax entirely.

Takaichi has reiterated her commitment to the 0% goal, stating that the government will continue exploring ways to implement system changes as quickly as possible while maintaining a strong determination to realize the policy.

Source: KTV NEWS

News On Japan
POPULAR NEWS

Japan’s World Cup campaign ended in the cruelest possible fashion on June 29, as Gabriel Martinelli scored in the fifth minute of stoppage time to give Brazil a 2-1 victory over the Samurai Blue in their knockout match in Houston. Japan had led in the first half and were still level at 1-1 in the final moments, but Martinelli’s late strike sent Brazil into the Round of 16 and eliminated Japan from the tournament.

Strong earthquakes have continued to shake parts of Japan in recent weeks, with 11 temblors measuring lower 5 or above on the Japanese seismic intensity scale recorded across the country since April 2026.

A Kintetsu Railway train derailed inside Kyoto Station on the morning of June 29, forcing partial suspensions on the Kintetsu Kyoto Line for the rest of the day and causing long delays that hit commuters, students and tourists.

A section of stone wall at Hikone Castle, one of Japan’s few surviving original Edo-period castles and a National Treasure whose main keep remains intact more than 400 years after its construction, collapsed after heavy rain caused by Typhoons No. 7 and No. 8, Hikone city officials said.

Japan advanced to the knockout stage of the World Cup after a 1-1 draw with Sweden on June 25, finishing second in Group F and setting up a Round of 32 clash with Brazil in Houston.

MEDIA CHANNELS
         

MORE Business NEWS

Tokyo stocks edged higher on June 29 as investors bought back selected shares after a sharp AI-led selloff, but gains were capped by caution over high technology valuations, Middle East tensions and a weakening yen that fell to its lowest level against the dollar since 1986.

Tokyo stocks fell sharply on June 26 as investors locked in profits from Japan’s record-setting AI-driven rally, with SoftBank Group and chip-related shares leading a broad retreat after reports that OpenAI may delay its initial public offering.

Japanese households held 2,386 trillion yen in financial assets at the end of March, up 7.1% from a year earlier, as rising share prices, wider use of the new NISA investment program and the weaker yen lifted the value of assets held by individuals.

The sale of religious corporations that operate temples and shrines across Japan is drawing growing scrutiny from authorities, who fear the transactions could be used for tax evasion and money laundering, as brokers openly advertise properties and corporate status for tens or even hundreds of millions of yen.

The Nikkei Stock Average fell for a second straight session in Tokyo as investors locked in profits from a rapid rally in artificial intelligence and semiconductor-related shares, briefly sending the benchmark down more than 1,300 yen before bargain hunting helped it recover part of the loss.

Imabari Shipbuilding, Kawasaki Heavy Industries, and Namura Shipbuilding are aiming to resume construction of liquefied natural gas carriers around 2035, as Japan’s shipbuilding industry looks for a path to recovery after losing much of the global market to lower-cost rivals in South Korea and China.

Finance Minister Katayama held online talks with U.S. Treasury Secretary Scott Bessent as the yen approached its weakest level in about 39 years, with the two sides believed to have discussed possible responses, including foreign exchange intervention.

Every year, thousands of people save money by buying through the Japanese auction process. But many do not realize they've paid too much until the vehicle arrives.