Japanese Prime Minister Sanae Takaichi has reaffirmed that she will not use special deficit-covering bonds to fund a temporary sales tax cut on food. In a post on X late Monday, Takaichi clarified her position after earlier remarks in parliament sparked speculation about a potential shift in policy. She stated that while she is not ruling out issuing government bonds for the national budget as a whole, the government will not rely on deficit-covering bonds to compensate for the revenue shortfall from the food tax cut. The government's stance remains unchanged, she emphasized, following media reports that misrepresented her earlier comments.
At a budget committee meeting, Takaichi explained that funding for the consumption tax reduction on food and beverages would be carefully examined within the broader framework of budget formulation reform. The goal is to reduce the debt-to-GDP ratio while monitoring tax revenue trends and reviewing both expenditures and revenues. The government plans to control the total annual issuance of government bonds through initial and supplementary budgets, as it did last fiscal year. The temporary tax cut, expected to cost ¥5 trillion ($31.5 billion) annually, is set to begin in April and last for two years.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing