Japan PM to mull suspension of food sales tax, Mainichi reports

JAPANESE Prime Minister Sanae Takaichi will consider a temporary suspension of sales tax on food as part of her election campaign pledge after her expected dissolution of parliament next week, Mainichi newspaper reported, citing unnamed people familiar with the matter. 

The government and Takaichi’s ruling Liberal Democratic Party are set to make a decision on the suspension after assessing the impact it may have on financial markets, the Mainichi said late Friday. 

The premier is expected to dissolve the lower house of the parliament on Friday and to call an election for February. 

While Takaichi supported the idea of cutting the sales tax on food before she took office in October last year, she has give little indication since then that she plans to follow through with the idea. The move would result in an annual shortfall of about 5 trillion yen (S$40.7 billion) in government revenue, Mainichi reported. 

Takaichi has pledged to carry out aggressive but responsible fiscal policy, and markets have reacted to speculation on her plans.

The yen weakened against the US dollar earlier this month after local media reported that she intends to call an election, while bond yields have risen and stocks have climbed to a record on market expectations that she intends to expand fiscal spending. BLOOMBERG