TOKYO, May 05 (News On Japan) - 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
