Japanese Prime Minister Sanae Takaichi on Monday (local time) announced that the consumption tax rate will be restored to its original 8% after the two-year reduction program ends. The move comes amid persistent inflation and growing concerns over the country's deteriorating fiscal health.
Speaking at a press conference, Takaichi emphasized that the consumption tax cut on food was a temporary measure to support the public during difficult times. However, she affirmed that the government would not maintain this policy long-term due to its negative impact on the national budget.
“We are committed to following the plan. After two years, the tax rate will return to 8%,” Prime Minister Takaichi said. The decision comes as Japan’s economy faces increasing inflationary pressures, while the already-high public debt burden continues to threaten fiscal stability.
The consumption tax cut on food was previously introduced by the Japanese government as part of economic stimulus measures to ease consumer hardship. However, analysts warn that extending the policy could worsen the budget deficit, especially since Japan has the world’s highest public debt-to-GDP ratio.
