Japanese prime minister vows to suspend 8% food levy ahead of election

Japanese Prime Minister ‌Sanae Takaichi on Monday called ⁠a snap general election with a vow to suspend an ‍8% food levy for two years, echoing proposals by her rivals despite the potential ‌strain on the country’s already precarious finances, CNN reported.

A consumption tax cut that many opposition parties have also proposed would create a huge hole in state revenue at a time when concern over Japan’s fiscal health is pushing up bond yields to multi-decade highs.

Japan levies an 8% consumption tax on food and a 10% levy on other goods and services, helping to fund rising social welfare costs ⁠among a rapidly aging population.

Takaichi said that a two-year exemption of the 8% food levy would cushion the blow to households from rising living costs. The government will not issue debt to fund the suspension, she said, adding that other measures could include a review of existing subsidies.