Government to Cut Consumption Tax on Food and Beverages from 8% to 1%, Also Introducing Worker Burden Reduction Support Payment
Macro
On September 15, 2026, the government approved at a Cabinet meeting the "Outline Concerning the Temporary Reduction of the Consumption Tax Rate on Food and Beverages and the Introduction of a Worker Burden Reduction Support Payment." Starting next April, the consumption tax rate on food and beverages will be lowered for two years, and a new benefit program, the "Worker Burden Reduction Support Payment," targeting working-age people with low to middle incomes, will begin. If the rate is cut from the current 8 percent to 1 percent, the tax burden on monthly food spending would be greatly reduced. As for funding, the policy states that the national burden for the consumption tax cut and the support payment in fiscal 2027 and fiscal 2028 will be secured "without relying on special-case government bonds, by streamlining subsidies and tax special measures, securing revenue other than additional tax revenue, and reviewing expenditures and revenues across the board," indicating that the funds will be covered not by issuing new government bonds but by reviewing existing budgets. The support payment will be conditional on income exceeding a lower threshold and being at or below an upper threshold, with high-income earners excluded and a phase-down rule under which the payment amount decreases as income approaches the upper limit. A "child addition" is also being considered, which would top up the payment for those with dependent relatives under age 19, or under age 16 during the first two years of the program.
