June 19, 2026
TOKYO – The National Council on Social Security appears to be in the final stages of settling on a plan to lower the consumption tax rate on food items to 1%, and effectively to 0% — a figure that has been a major objective for Prime Minister Sanae Takaichi.
A chairperson’s draft presented to the council Wednesday stated that revenue taken in by the 1% tax would be returned as cash handouts to the public so the government could claim that the rate had effectively been slashed to zero. However, opposition parties have bristled at the plan and insist that the issue requires further discussion.
Itsunori Onodera, head of the working group subcommittee of the council and chairman of the Liberal Democratic Party’s Research Commission on the Tax System, declared the draft was a significant step. “This plan would mean that, overall, the consumption tax rate on food and drink items is effectively zero,” Onodera said to reporters after the council’s meeting Wednesday. “I presented it as a plan to move the process forward, even by one step.”
Onodera met secretly with Takaichi at the Prime Minister’s Office on June 12 — the day before she left for her trip to Europe — and showed her the original draft. Takaichi has been unbending in her determination to make the 0% tax rate on food items a reality because this was among the commitments the Liberal Democratic Party made during February’s House of Representatives election. Given that the draft reflected her desire for a 0% rate, Takaichi indicated she would accept the plan and said to Onodera, “I’ll leave this in your hands.”
Updating cash register systems and making other necessary preparations for cutting the rate to 1% would take about six months less than if the rate were cut to zero. The chairperson’s draft adopted the 1% option because this rate could be implemented from April 2027. By calling for revenue accrued by the 1% tax to be returned as benefits to low- and middle-income earners, the draft also aimed to head off criticism that the party had broken its pledge to lower the rate to zero.
Onodera intends to compile an interim report before the end of June. “I’d like to hold several meetings next week and vigorously discuss this issue,” Onodera said of the council, which has members from the government and ruling and opposition parties.
Takaichi hopes to reflect the new tax rate in the Basic Policy on Economic and Fiscal Management and Reform, which the Cabinet will decide on in July, and pave the way for relevant legislation to be enacted during the extraordinary Diet session this autumn.
Despite this, some ruling and opposition party members have not enthusiastically supported the 1% plan during previous working-level meetings. It would be a stretch to say the chairperson’s draft represents a total consensus among the participants. Some opposition parties have expressed discontent over the process and remain reluctant to cut the consumption tax rate. “We’ve barely discussed the issue,” said Motohisa Furukawa, acting representative of the Democratic Party for the People.
Takaichi has said in the Diet and on other occasions that gaining the cooperation of opposition parties would be one condition for submitting a bill on this issue. Takaichi’s ability to live up to those comments will be put to the test, and her decisions on this matter will be closely watched.