Komeito's Bold Proposal: Tax Cuts and Cash Payouts Ahead of Election

Japan's junior ruling coalition partner, Komeito, is preparing to unveil a significant campaign proposal: reducing the consumption tax on food items from 8% to 5%, according to the Yomiuri newspaper. The proposal, expected to be announced on Friday, also includes cash payouts to mitigate rising household costs.

This initiative is set to be financed through anticipated tax revenue increases, eschewing additional debt, per draft documents seen by Yomiuri. Japan's current consumption tax stands at 8% for food and 10% for other items, primarily supporting social welfare expenses in a rapidly aging economy.

Komeito's tax reduction proposal applies pressure on Prime Minister Shigeru Ishiba and the Liberal Democratic Party to expand fiscal support to voters, especially with upper house elections on the horizon. While opposition parties advocate for tax cuts, the government remains cautious, wary of exacerbating Japan's fiscal challenges amid rising bond yields.

(With inputs from agencies.)