Japan Retail Sector PM Takaichi formally announces plans for a two-year consumption tax cut starting April 2027

Research evidence excerpt

Japan Retail Sector PM Takaichi formally announces plans for a two-year consumption tax cut starting April 2027

Global Research

30 July 2026ab

First Read

EquitiesJapan Retail Sector

PM Takaichi formally announces plans for a two- Japan

year consumption tax cut starting April 2027 Retail

Takahiro Kazahaya

Analyst

takahiro.kazahaya@ubs.com

Key points +81-3-5208 6226

Prime Minister Takaichi held a press conference at the Prime Minister's Office on 30 July Kazuki Oike

to discuss the consumption tax cut plan (link, Japanese only). Analyst

kazuki.oike@ubs.com

Details of the announcement +81-3-5208 6964

At the press conference, Prime Minister Takaichi announced the tax cuts as "transitional Hirotaro Hasegawa

measures" for two years starting April 2027, until the full-scale introduction of an Associate Analyst

income-linked detailed benefits system in FY3/30. The plan includes reducing the hirotaro.hasegawa@ubs.com

consumption tax rate on food and beverages subject to the reduced tax rate from 8% to +81-3-5208 6684

1% and the early implementation of income-linked detailed benefits for middle- and

low-income working households starting June 2027. She also stated that the

government and ruling party would finalise the policy on income-linked detailed

benefits and the "transitional measures" in early August, work out the details of the

system, and decide on the framework in September before submitting a bill to the Diet

during its extraordinary session with the goal of prompt enactment.

Household survey: Food expenditures and tax reduction impact

The government’s latest household survey shows the average monthly food expenditure

for households with two or more members in 2025 was ¥94,895, or ¥74,548 excluding