The Japanese government on Friday adopted legislation to cut the consumption tax rate for food and to introduce a benefit programme linked to income levels, according to a Jiji Press report from Tokyo.
As a temporary measure to tackle soaring prices, the government plans to reduce the 8 per cent consumption tax rate on food items to 1 per cent for two years from fiscal 2027, which begins next April.
The reduction would be the first since the consumption tax was introduced in 1989, making it the first downward movement in the levy's thirty-seven-year history.
The legislation is to be submitted to the ongoing extraordinary session of the Diet, Japan's parliament. The government is aiming to secure its enactment by 12 December, when the session ends.
A total of some 10 trillion yen will be needed for the tax cut and the benefit programme over the two years.
The measure is a policy of the government of Prime Minister Sanae Takaichi, who heads the ruling Liberal Democratic Party. The accompanying benefit programme is to be linked to income levels, so that support varies with what households earn.
The cut is framed as temporary. The reduced rate is to run for two years from April, and the government presents it as a response to soaring prices rather than a permanent change to the levy.
The arithmetic rewards attention. Of the eight percentage points charged on food, seven are to be removed and one is to be retained, and it is the retained one that does the structural work.
A rate of zero would take food out of the consumption tax altogether. A rate of one keeps it inside: the category survives, the accounting survives, the line on the receipt survives, and in two years the figure can be restored without anything having to be introduced again.
The two-year limit completes the arrangement. A rate that is scheduled to come back is not a rate that has gone. It is a rate on leave, its position held open and its paperwork maintained in its absence.
This newspaper therefore records the measure not as the first cut to Japan's consumption tax but as the first cut to its first digit. The tax itself is undisturbed and remains in excellent health.
The Department of Unnecessary Research observes that the surviving one per cent is among the most expensive single percentage points in modern public finance. Some 10 trillion yen is required over two years to arrive at a position in which food is still taxed.
The principle has attractive extensions. Any rate may be reduced indefinitely while remaining a rate, and a levy held at its smallest non-zero setting is a levy held. Officials would need only to agree how small a number may become before it stops being one.
Japan has collected this tax on food since 1989 and will go on collecting it from April. The amount has been cut by seven-eighths. The habit has not been cut at all.