Japan Considers Sales Tax Cut to Combat Rising Costs

Japan's ruling coalition is contemplating a temporary sales tax cut to mitigate the effects of rising living costs and U.S. tariffs. The proposed measure targets food items, while cash payouts could support households as legislation is underway. However, fiscal concerns about Japan’s social welfare costs present challenges.

Japan's ruling coalition is weighing a temporary cut in sales tax to alleviate the financial pressures of increasing living costs and U.S. trade tariffs, according to Yomiuri newspaper reports.

The proposed reduction, aimed at food items, comes as prices continue to climb. Komeito, the ruling Liberal Democratic Party's coalition partner, supports the move, with leader Tetsuo Saito highlighting the importance of easing household and corporate burdens through tax cuts.

While legislative hurdles mean that immediate tax adjustments may take time, Komeito advocates for interim cash payouts to aid households. However, concern remains within some Liberal Democratic Party circles, given the reliance on tax revenues to fund Japan's growing social welfare expenses due to an aging population.

(With inputs from agencies.)