Japan approves FY 2027 tax reform, paves way for food tax cut from April

TOKYO - The government on Tuesday approved a tax reform package that would cut Japan's 8 percent consumption tax on food and nonalcoholic beverages to 1 percent for two years starting in April 2027 to ease the burden of rising prices.

The government will not count on deficit-financing bonds to cover the tax revenue shortfall, estimated at roughly 10 trillion yen ($65 billion), Finance Minister Satsuki Katayama said amid growing concerns over how it will secure the necessary funds. The government will outline its funding plan by the end of this year.