FX.co ★ Takaichi Weighs Food Tax Cut Ahead of February Election

Japanese Prime Minister Sanae Takaichi is contemplating a proposal to temporarily suspend the 8% sales tax on food as part of her campaign strategy for the upcoming snap general election, slated for next month. This initiative, reported by the Mainichi newspaper, is under careful consideration by the government and the Liberal Democratic Party, which are assessing potential market implications. Eliminating this tax could lead to an approximate annual decrease of JPY 5 trillion in government revenue. Prime Minister Takaichi intends to dissolve parliament and call for an early election to gather public support for her fiscal expansion agenda, a move that has already created unease in financial markets. According to two lawmakers from the LDP, the election might occur on February 8. Additionally, Takaichi is expected to hold a press conference later on Monday to officially declare the dissolution of parliament, aiming to leverage her administration’s strong approval ratings.