Japan's Takaichi Vows Food Tax Cut Without New Debt as Parliament Opens 69-Day Session

Japanese Prime Minister Sanae Takaichi on Monday pledged to cut the consumption tax on food products without issuing new bonds, as a 69-day extraordinary session of parliament opened, Kyodo News reported.

In her policy speech to the House of Representatives, Takaichi pressed ahead with her "responsible, proactive fiscal policy," pledging long-term government spending to spur investment and strengthen the economy even as a weak yen and funding concerns cloud the outlook, The Japan Times reported. The session runs until December 12.

Tax cut without new debt

The planned legislation would cut the consumption tax on food and beverages from 8 percent to 1 percent for two years from April, paired with cash benefits for middle- and low-income earners. Takaichi said it was intended to "create even a little more room in household finances" amid inflation.

"To ensure market confidence, we will secure funds without relying on (the issuance of) deficit-covering bonds, so please rest assured," she said, according to Kyodo. Japan's fiscal health is already the worst among the Group of Seven nations.

Opposition parties argue the plan would not provide immediate relief.

Five-year investment plan and fewer MPs

Takaichi said her government would map out a five-year action plan by year-end to promote domestic investment, including in economic security, cyber defence, artificial intelligence and semiconductors.

She also backed a bill, carried over from the previous session, to reduce the number of lower house seats. If no conclusion is reached within a year after it takes effect, the bill would automatically cut 45 seats from the proportional representation blocks. Takaichi said she expects "thorough deliberations toward its realization during the current session."

The government plans to submit 21 bills, including measures to diversify Japan's crude oil sources amid the Middle East conflict.

China an "important neighbor"

On foreign policy, Takaichi called China an "important neighbor" despite ongoing tensions and said Japan aims to build "constructive and stable" relations with Beijing, while stressing that Tokyo would "say what must be said and strongly urge responsible actions."

She also said a revision earlier this year to the law on constitutional referendums had "greatly advanced the conditions for the public to make their judgment" on amending the pacifist Constitution, and called for "constructive and active cross-party debates."

A commanding majority

Takaichi's Liberal Democratic Party and its junior partner, the Japan Innovation Party, won far more than two-thirds of the 465 lower house seats in the February election. Opposition parties are expected to question two ministers appointed in September who had previously been disciplined by the party over a political slush fund scandal, Kyodo reported.