A temporary cut to the sales tax on food is already included in a ruling bloc agreement that Takaichi’s Liberal Democratic Party (LDP) signed with junior partner Japan Innovation Party. Currently Japan applies an 8% tax on most purchases of food and non-alcoholic beverages, compared with a standard consumption tax rate of 10%. On Friday, co-leader Yoshihiko Noda said his party would look to cut the sales tax while maintaining fiscal discipline and not issuing additional deficit bonds. If Japan’s giant pension fund could also be used to fund the sales tax cut by using some of its profits from managing overseas assets, the yen would be bought in the trillions each year, Okamoto added. Japan’s government bond yields jumped as reports on the food sales tax cut renewed fiscal concerns.
