Japan PM Takaichi Won't Rule Out Bond Issuance to Fund Food Tax Cut: 8% Levy on Food to Fall for Two Years from April
TOKYO, Japan — Japanese Prime Minister Sanae Takaichi told parliament on October 19 that she would not rule out issuing bonds to fund a two-year cut to the country's consumption tax scheduled from April next year, Reuters reported.
The government has laid out a plan to cut the 8 percent levy on food items from April next year as part of efforts to cushion households from rising living costs. "The government will seek to stably lower the ratio of debt balance to gross domestic product by reviewing both spending and expenditure," Takaichi said. "As we do this, we will appropriately control the size of annual bond issuance. We would not rule out the chance of issuing bonds altogether." She also said Japan can heighten market trust in the yen by pursuing steps to strengthen the economy.
The consumption tax is a major revenue source for Japan, and a food tax cut leaves a sizable funding gap that has been a central point of contention in parliament. The Takaichi cabinet favors bridging the cost, including through bond issuance, while opposition parties and some market participants worry about further swelling Japan's already large public debt, pushing up long-term interest rates and pressuring the yen.
Earlier, on October 9, Takaichi told parliament the government would continue to scrutinize exchange-rate and price developments carefully and respond appropriately, noted that Japan's economy was no longer experiencing deflation, and said the administration fully respects the Bank of Japan's independence in setting monetary policy. The fate of the food tax legislation and its final financing remain a focus for Japanese politics and markets this winter.
Source: GSM · USA (original Chinese edition)
Photo: 图：位于东京的日本国会议事堂。Daderot 摄，CC0，经 Wikimedia Commons 发布。/ The National Diet Building in Tokyo, Japan. Photo by Daderot, CC0, via Wikimedia Commons.
