Takaichi prepares tax cut amidst economic and political headwinds

While the details are still pending, Prime Minister Takaichi Sanae will likely make a decision this month to cut the consumption tax on foodstuffs starting in April 2027.
Among the details to be considered is whether to offset the cost of the tax or rely on higher tax revenues, but the latter option could be risky given ongoing uncertainty stemming from the Hormuz crisis.
If she proceeds with the tax cut, Takaichi will show once again that her political priorities are paramount, though this decision could also spur greater mobilization against her government from her own party’s fiscal hawks.