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Japan PM Takaichi Vows to Cut Food Tax After Landslide Election Win
Japanese PM Sanae Takaichi promises a two-year suspension of the 8% food tax after her LDP’s decisive electoral victory, aiming to ease household costs.
ND
by News Desk
2026-02-09
Japan PM Takaichi Vows to Cut Food Tax After Landslide Election Win

Japanese Prime Minister Sanae Takaichi renewed her pledge to suspend the 8% sales tax on food for two years following a historic election victory that strengthened her mandate for fiscal stimulus. Takaichi described the tax suspension as a “long‑cherished dream” and promised to implement it at the earliest possible date, while ruling out new debt issuance to fund the move.

Her Liberal Democratic Party (LDP) secured a strong majority in Sunday’s parliamentary elections, paving the way for proactive fiscal policies aimed at easing household living costs. Markets reacted positively, with Japanese stocks hitting record highs and the yen stabilizing after early volatility.

Takaichi said cross-party discussions would help determine the timetable and funding options for the tax suspension. The government is considering alternatives such as non-tax revenues and cuts to existing subsidies to offset the projected annual cost of 5 trillion yen ($32 billion) — equivalent to Japan’s annual education budget.

While her strong electoral mandate may sideline opposition from fiscal conservatives within the LDP, analysts warn that funding uncertainty could unsettle markets. Tapping Japan’s $1.4 trillion foreign exchange reserves or raising government debt could fuel yen weakness, increase import prices, and dilute the intended benefits for households.

“Past fiscal policy has been too tight, and it’s clear the premier favors overhauling it,” said Ryutaro Kono, chief Japan economist at BNP Paribas. However, Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan, cautioned: “If concern over worsening finances causes unintended yen falls, higher food import costs may hurt her popularity.”

Takaichi also emphasized the need for long-term budget planning to promote corporate investment in growth sectors, signaling a broader shift in Japan’s fiscal approach beyond the immediate tax suspension.
Tagged:

FiscalPolicy

SanaeTakaichi

JapanEconomy

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