Takaichi won't rule out bond issuance to fund food tax cut
Prime Minister Sanae Takaichi told parliament on Monday she would not rule out issuing bonds to fund a two-year cut to Japan's 8 per cent consumption tax on food items scheduled from April next year.
Japanese Prime Minister Sanae Takaichi said on Monday she would not rule out issuing bonds to fund a two-year cut to the country’s consumption tax scheduled from April next year.
“As we do this, we will appropriately control the size of annual bond issuance,” Takaichi told parliament. “We would not rule out the chance of issuing bonds altogether,” she added, pointing to bond proceeds as a possible funding source for the scheduled sales tax cut. The government will seek to stably lower the ratio of debt balance to gross domestic product by reviewing both spending and expenditure, she said.
The remarks, reported by Reuters journalist Leika Kihara (https://www.channelnewsasia.com/business/japan-pm-says-wont-rule-out-debt-issuance-fund-tax-cut-6471211 and https://kwsn.com/2026/10/19/japan-pm-says-wont-rule-out-debt-issuance-to-fund-tax-cut/), mark a fresh signal on fiscal policy two weeks after Takaichi pledged fiscal discipline in her policy speech.
The government plans to cut the 8 per cent levy on food items from April next year to cushion households against rising living costs. Markets are watching closely: the 30-year Japanese government bond yield hit a record high of 4.235 per cent on 5 October, as investors fretted over the cost of Takaichi’s spending plans (https://www.thestandard.com.hk/finance/article/344586/Japans-30-year-bond-yields-hit-record-high-ahead-of-PMs-remarks). Japan’s public debt stands at roughly twice the size of its economy, the largest burden in the developed world.
Takaichi also said Japan could heighten market trust in the yen by pursuing steps to strengthen the economy.
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