Gov't considers subsidies for restaurants, farmers hit by consumption tax cut

TOKYO — The Japanese government is considering extending support to restaurant operators and farmers hit by a drop in sales under an envisaged cut in the consumption tax on food items, sources familiar with the matter said Thursday.

While cross-party discussions are still ongoing on the idea of a tax reduction, Prime Minister Sanae Takaichi, who is seen as leaning toward lowering the rate on food items to 1 percent from the current 8 percent, told a parliamentary session that the government will "extend thorough support."

A national council comprising lawmakers from both the ruling and opposition parties is expected to compile an interim report on the issue later this month.

Takaichi is expected to lower the rate to 1 percent from April 2027, according to the sources.

The provision of subsidies would help restauranters to cushion the potential blow from a tax reduction, which would boost the relative appeal of lunch boxes and prepared meals as the 10 percent rate is applied to dining out.

Farmers, for their part, would see their revenues decline if the consumption tax rate is cut, given that many of them are currently exempted from tax payments to the authorities. Businesses with taxable incomes of up to 10 million yen ($62,600) are exempt from taxation.

© KYODO