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Julian Ryall

When Sanae Takaichi strode into her first press conference as Japan’s reappointed prime minister on Wednesday, she delivered a clear message to the economists and editorial boards warning her away from her signature tax pledge.
Food consumption tax is going to be scrapped, and nothing is going to stop her.
Formally confirmed in office after the Diet voted to reappoint her – following a landslide victory in the House of Representatives election on February 8 – Takaichi reiterated her commitment to eliminating the 8 per cent levy on food and announced plans to establish a cross-party “national council” to examine the matter before summer.
Analysts expect the panel to report by late autumn, with any cuts potentially taking effect in early 2027.

The pledge proved enormously popular among voters battered by years of rising prices. But critics also found it deeply alarming.
The International Monetary Fund fired a warning shot on Tuesday, urging Tokyo to avoid “untargeted measures” that could worsen Japan’s already heavy tax burden.
“Support for vulnerable households and firms most affected by rising costs of living or large external shocks should be budget neutral, temporary and targeted to these groups,” the Washington-based fund said in a statement after talks with Japanese financial authorities.
The IMF is not alone. In an editorial published the day before Takaichi’s reappointment, the Mainichi newspaper called on her to “reconsider” the plan, warning in an editorial that eliminating the food tax would drain roughly 5 trillion yen (US$32.5 billion) from the national treasury every year.

Japan’s public debt already stands at around 230 per cent of gross domestic product, the heaviest burden borne by any advanced economy. Piling on more could eventually undermine Japan’s capacity to pay for food imports, upon which the country is heavily reliant, and trigger the very price increases the tax cut was designed to prevent, the Mainichi cautioned.
“Reducing the tax to ease household burdens is only a temporary measure and could heighten fiscal concerns,” it said. “This approach is far from the ‘responsible proactive fiscal policy,’ which Takaichi herself advocates.”
Even the Yomiuri, which is typically sympathetic towards Takaichi, sounded a note of caution ahead of the election, reminding readers that consumption tax revenues underpin Japan’s pension, healthcare and elderly care systems – and that any debt accumulated today will ultimately fall on future generations to repay.
‘Principle and pride’
None of this criticism appeared to have shaken Takaichi’s resolve, said Hiromi Murakami, a professor of political science at Temple University’s Tokyo campus.
“She cannot go back now because this was one of the key policies that she had before the election and it was popular with the voters,” Murakami said.
“Takaichi is determined to show that she is a woman of her word and that she cannot be swayed, even when the opposition is from sceptics in her own party. For her, it has become a matter of principle and pride.”
The scale of Takaichi’s election victory seems to have only hardened that conviction, persuading her that she has a clear mandate to push forward.

But within the ruling Liberal Democratic Party, there have been whispers about what happens after the cut. Eliminating the tax is the easy part – reinstating later if needed will be an altogether different political ordeal.
“They know they are going to get blamed,” Murakami said of Takaichi’s quiet critics within the LDP.
“This is only short-term assistance for households … we also do not know how it will affect the bond market and the yen exchange rate,” she said. “When you factor in the impact on the national debt, then it is not at all clear that this is going to ease the burden on the public.”
Go Ito, a professor of politics at Tokyo’s Meiji University, expects the proposed two-year tax cut to take effect in early 2027 and expire conveniently just after the upper house election, which must be held before the end of 2028.
The worry for the government has to be that the nation’s finances will be in an even worse state by then
Go Ito, politics professor
“The worry for the government has to be that the nation’s finances will be in an even worse state by then,” he said, citing rising debt, defence expenditure and investment commitments made to Washington.
And when the time comes to reinstate the tax, returning to 8 per cent may no longer be sufficient, according to Ito.
For now, Takaichi appears unmoved by the gathering chorus of concern: a stance that carries its own long-term risks. A prime minister who campaigns so publicly on a single pledge leaves herself little room to manoeuvre if the results disappoint.
“She seems very stubborn,” Murakami said. “She is going ahead with policies even when advisers are telling her not to. Clearly she believes very strongly in keeping her word and … does not want to appear indecisive.”
It is a bet on political capital over budgetary caution, analysts say. And if it goes wrong, Takaichi will have no one else to blame.


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Japan

A shopper visits a supermarket in Tokyo last month. Japan currently applies an 8 per cent consumption tax to most food and drink purchases. Photo: Kyodo

Japan’s Prime Minister Sanae Takaichi addresses a press conference in Tokyo on Wednesday. Photo: AFP

Pedestrians walk past a shopping centre in Tokyo. Japan’s public debt stands at around 230 per cent of GDP. Photo: Reuters

Takaichi and her new cabinet members pose for a group photo at the Prime Minister’s Office in Tokyo on Wednesday. Photo: EPA

Is Japan’s new opposition alliance already ‘dead in the water’?

Yoshihiko Noda (left) and Tetsuo Saito announce their resignation as co-leaders of the opposition Centrist Reform Alliance at a press conference in Tokyo on Monday. Photo: Xinhua

Supporters of the Centrist Reform Alliance listen to a speech at a campaign rally on Saturday, the eve of Japan’s election. Photo: AP

Japan’s Prime Minister Sanae Takaichi, leader of the ruling Liberal Democratic Party, speaks at LDP headquarters in Tokyo on Monday. Photo: AFP

Japan’s Takaichi steps back from Liancourt Rocks pledge in sign of softer line on South Korea

The Dokdo or Takeshima Islands. Photo: AP

Japan’s Prime Minister Sanae Takaichi. Photo: TNS

Visitors tour South Korea’s easternmost Dokdo islets, also known in Japan as Takeshima. Photo: EPA-EFE/Yonhap

Japan’s Takaichi won the election, but at what cost to the LDP?

Japan’s Prime Minister Sanae Takaichi, leader of the ruling Liberal Democratic Party, speaks to the media at the LDP headquarters in Tokyo on Sunday. Photo: EPA

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The newly reappointed prime minister is gambling 5 trillion yen a year on a popular election promise that could backfire badly


The newly reappointed prime minister is gambling 5 trillion yen a year on a popular election promise that could backfire badly.


Japan’s Takaichi pushes to scrap food tax, ignoring economists’ warnings

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The newly reappointed prime minister is gambling 5 trillion yen a year on a popular election promise that could backfire badly

The newly reappointed prime minister is gambling 5 trillion yen a year on a popular election promise that could backfire badly