Takaichi pushes food tax cut despite fierce headwinds in parliament

Japanese Prime Minister Takaichi Sanae is pressing ahead with a controversial plan to cut the consumption tax on food, leveraging the commanding grip on government she secured after a landslide lower-house election victory last February. Significant resistance within the ruling Liberal Democratic Party and an unfavorable seat count in the upper house mean the bill faces a rocky road through parliament.

Takaichi must now manage public unease over the temporary food-tax reduction and signs of fracture within the LDP — a challenge she will have to address through cabinet and party personnel decisions. The tax-cut plan has emerged as the defining issue in Japanese politics.

According to local media reports Thursday, the Takaichi cabinet held a cabinet meeting Wednesday and formally approved a plan to temporarily cut the consumption tax rate on food from the current 8 percent to 1 percent for two years starting next April.

The government estimates the reduction would lower the tax burden on each citizen by 36,000 yen ($228) per year.

The plan also calls for cash payments equivalent to the 1 percent food consumption tax revenue to be distributed to low- and middle-income households, effectively bringing their real consumption tax burden down to zero.

Major outlets including the Yomiuri Shimbun, the Nikkei and the Mainichi Shimbun criticized the policy as running counter to the LDP's long-standing effort to establish the consumption tax as a stable funding source for social security.

The Nikkei warned that "such a forced decision-making process could become a source of trouble for the administration going forward."

During the LDP leadership race last autumn, Takaichi held back her calls for tax cuts to secure the backing of LDP Vice President Aso Taro, who prioritizes fiscal discipline. After her sweeping lower-house election victory in February, however, she moved aggressively to push through the food consumption tax reduction.

Concerns have been widespread that a tax cut without a clear funding plan could further fuel the already serious weakness of the yen and push interest rates higher.

Onodera Itsunori, the LDP's tax commission chief who drafted the temporary food-tax reduction plan, reportedly asked Takaichi directly to attend a party meeting and persuade lawmakers — a request she dismissed, saying it was unnecessary.

The governing style that critics call autocratic was on display again in the food-tax episode. The Mainichi explained that behind it lay the support of so-called "Takaichi Kids" — first-term lawmakers who won their seats on the strength of her personal popularity.

At the LDP general council meeting held Wednesday ahead of the cabinet decision, senior lawmakers opposed to the plan — including former tax commission chief Miyazawa Yoichi — stayed away, and the measure passed with unanimous approval from those present.

Although the latest polling has put the cabinet's approval rating at its lowest since taking office, Takaichi still faces no credible rival and maintains a dominant hold on power. Word has spread within the party that opposing the tax cut could invite unfavorable treatment in future personnel decisions — both for party posts and cabinet positions.

The Sankei Shimbun reported that resistance within the Finance Ministry, which has traditionally opposed tax cuts, appeared to have been suppressed by signals from the prime minister's office that officials who objected could face personnel disadvantages.

"There is public frustration over the heavy tax burden, and today's Finance Ministry bears no resemblance to the 'most powerful ministry' that once moved even past administrations," the Sankei added.

Takaichi plans to pass the temporary food-tax reduction bill at an extraordinary parliamentary session in September, but the ruling coalition of the LDP and Nippon Ishin no Kai falls short of a majority in the upper house, raising the possibility that her push-through approach will hit a wall.

Depending on how approval ratings shift, lawmakers within the party and cabinet who have so far stayed quiet in their opposition to the tax cut could also begin to speak up.

The Yomiuri said the cabinet reshuffle and key LDP personnel appointments expected next month have become a central challenge for the administration, noting that Takaichi "will face a difficult choice between building a lineup that prioritizes policy alignment and pursuing a broad-tent 'all-party unity' structure."

Some analysts say the reshuffle will give Takaichi an opportunity to lay the groundwork for re-election as LDP leader ahead of her term's expiration next September.

Political observers in Japan are watching closely what roles will be assigned to Defense Minister Koizumi Shinjiro, Internal Affairs Minister Hayashi Yoshimasa, Foreign Minister Motegi Toshimitsu and LDP Policy Research Council Chairman Kobayashi Takayuki — all of whom competed against Takaichi in the last leadership race.

Particular attention is focused on the future of LDP Secretary-General Suzuki Shunichi, a former finance minister who prioritizes fiscal discipline and is considered a close ally of Vice President Aso.

The right-leaning Nippon Ishin no Kai — which backed Takaichi's rise to power and has since expanded its influence — is also eyeing a stronger coalition arrangement and a cabinet seat, adding another key variable to how the Takaichi administration navigates the road ahead.