Japan Mulls Covering Local Govts’ Revenue Losses from Tax Cut

Tokyo, Aug. 13 (Jiji Press)–The Japanese government is considering covering revenue losses at local governments resulting from a planned consumption tax cut, according to informed sources. As local governments use consumption tax revenues for social security services, the central government intends to prevent the tax cut from affecting these services for residents. The consumption tax rate on food is set to be lowered to 1 pct for two years from April 2027. The internal affairs ministry estimates that the tax cut will reduce local governments’ tax revenues by a total of about 1.6 trillion yen per year. To offset the revenue losses, the central government may provide special subsidies to local governments. Such subsidies were provided when the administration of former Prime Minister Fumio Kishida implemented a tax cut of 40,000 yen per person in 2024. END [Copyright The Jiji Press, Ltd.]