Posted: Finance Minister Katayama’s August 5, 2026 Press Conference

The basic policy is intended to promote employment by reducing the burden on working people with low or middle incomes, increasing take-home pay in line with income, and easing work disincentives caused by annual income thresholds.

Until the system is fully introduced, the government aims to effectively reduce the consumption tax on food and beverages to zero by combining a tax-rate reduction with income-linked benefits.

Income-linked benefits will reduce the burden on working people with low or middle incomes, ease work disincentives, and promote employment.

For food and beverages, the government aims to achieve an effective zero tax burden by combining a tax-rate reduction with benefits.

In fiscal 2027, benefits will be introduced using income information held by public institutions, within the amount equivalent to the 1% consumption tax on food and beverages. The government will consider measures for farm workers and others, assess the impact including on the food-service industry, and consider budgetary measures such as financing support.

Funding will be secured through comprehensive reviews of expenditures and revenues, including reviews of subsidies and special tax measures, without relying on special deficit-financing bonds. The government explained that surplus revenue in the Foreign Exchange Special Account fluctuates, but part of it is being used for defense funding and other purposes.

The government will advance the system’s detailed design, finalize the framework in September, and then submit a bill to the extraordinary Diet session. It will also proceed with the detailed work needed to decide the transitional measures and the relevant laws and cabinet orders.