Komeito's Bold Tax Reduction Proposal: A Game Changer?

Japan's junior ruling coalition partner, Komeito, is gearing up to propose a significant cut in the consumption tax rate for food items, slashing it from 8% to 5%, as part of their campaign pledge for the upcoming July upper house elections. The Yomiuri newspaper reported on this initiative on Wednesday.

The anticipated campaign pledge, set to be announced on Friday, is also expected to include a provision for cash payouts aimed at cushioning the impact of escalating living costs on households, as per the paper. A Komeito official, who wished to remain anonymous, corroborated the tax cut plan while speaking to Reuters.

According to a draft obtained by Yomiuri, the stimulus proposal is poised to be financed through projected increases in tax revenue, steering clear of additional debt. This move aims to pressure Prime Minister Shigeru Ishiba to enhance fiscal support, amid resistance from senior LDP officials concerned about deteriorating national finances.

(With inputs from agencies.)