Regarding alternative revenue sources to offset the reduction of the consumption tax on food and beverages to 1 percent—a measure approved by the Cabinet on the 5th—Prime Minister Takaichi stressed that the government will secure funding through a zero-based review of the budget.

Japanese Prime Minister Takaichi Sanae stressed on August 5 that the government will secure funding to offset the reduction of the consumption tax on food and beverages to 1 percent.

Prime Minister Takaichi Sanae / We will further review special tax measures and government subsidies. In addition to tax revenue, we will also pursue every possible source of non-tax revenue by conducting a zero-based review of all special accounts and government funds.

Prime Minister Takaichi also emphasized that the government will take every necessary measure to ensure the tax cut does not affect social security programs, for which the consumption tax is a key source of funding.

Her remarks came after the government approved a policy to lower the consumption tax rate on food and beverages to 1 percent for two years beginning April 2026.

Prime Minister Takaichi reiterated her intention to submit the necessary legislation during the extraordinary Diet session scheduled for this fall.

However, it remains uncertain whether the ruling coalition—which lacks a majority in the House of Councillors—can secure support from opposition parties, many of which have raised concerns about how the tax cut will be funded.