TOKYO, July 29 (Reuters) – Japanese Prime Minister Sanae Takaichi conveyed to ruling party executives her intention to proceed with a plan to cut the sales tax rate on food items to 1% from 8% for two years from April next year, the Yomiuri newspaper reported on Wednesday.
Takaichi met with former prime minister and ruling party heavyweight, Taro Aso, and Liberal Democratic Party (LDP) Secretary General Shunichi Suzuki on Tuesday to convey the plan, the paper said.
Aso told Takaichi he would not oppose the tax cut if the prime minister decided to do so, Yomiuri said, citing anonymous government and ruling party sources.
The government plans to finalise the tax cut plan in a cabinet meeting in early August, and submit relevant legislation in a parliament session convening in autumn, the paper said.
The government and LDP were not immediately available for comment.
Takaichi has pledged to suspend the 8% levy on food for two years as a temporary step before introducing a new payout system targeting low and middle-income households, as part of steps to cushion the blow from rising living costs.
The idea, however, has drawn pushback from ruling and opposition lawmakers on concern over the impact on Japan’s worsening finances, as the administration has not explained how it plans to fill the revenue shortfall.
Japanese government bond (JGB) yields have risen to multi-decade highs earlier this month as investors focus on Takaichi’s expansionary fiscal policy that could add to Japan’s huge debt pile.
(Reporting by Leika Kihara; Editing by Sam Holmes)
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