August 5, 2026
[Provisional Translation]
(Reporter)
My name is Chiba and I am with The Nikkei.
At the extraordinary cabinet meeting just convened, the Cabinet approved reducing the consumption tax rate on food items. First of all, I would like to hear your thoughts on this.
Also, I understand that you plan to submit a bill on this matter at the next extraordinary session of the Diet. I would like to know when you will explain the process for moving forward in designing the system, as well as the specific funding sources for this initiative. Thank you.
(Prime Minister Takaichi)
To me, the most important issue we face at present is easing the financial burden of middle- and lower-income people, who are struggling under the strain of taxes and social insurance premiums alongside rising prices, and I want to lighten that load at the earliest possible time.
From that standpoint, even as we pursue refundable tax credits as the centerpiece of our reforms, we have been considering a reduction in the consumption tax rate on food and beverages as an interim measure until the refundable tax credit system gets fully implemented, with a view to transitioning to a refundable tax credit system.
Now, following discussions at the National Council for Social Security and the ruling-party process, the Cabinet has just approved the basic policy for introducing the refundable tax credit system. I wish to convey my heartfelt appreciation to everyone involved in the coordination work until now for the tremendous efforts they have made.
Going forward, we will proceed further in designing the system in detail, and after deciding upon the basic outline in September, we intend to submit a bill to the extraordinary Diet session, aiming for its early enactment.
As for securing the financial resources to fund this initiative, this has already been laid out as the policy on reforming the budget formulation process. We will keep a close eye on trends in tax revenue and press forward with reviews of both the expenditure and the revenue sides. We will at the same time conduct a careful examination of the fiscal scale that can be accommodated as we work to lower the debt-to-GDP ratio in a steady manner. We will determine in concrete terms the full-year amount of government bonds to be issued.
In addition, I have been saying for quite some time that we must break away from fiscal management that depends on supplementary budgets. We will limit the use of supplementary budgets to measures that are truly urgent.
The supplementary budgets in recent years have included, out of necessity, large amounts of funding to combat rising prices. However, given that the finely targeted benefits linked to income and the interim measure both have significance as measures to counter rising prices, we will review this supplementary budget in a way that differs from those of previous years.
Moreover, we will take an even deeper review of the special measures concerning taxation and subsidies. Japan also has non-tax revenues, which totaled roughly 9 trillion yen for the current fiscal year, fiscal 2026, sourced from transfers from the Foreign Exchange Fund Special Account, payments from independent administrative agencies and other entities, and so on.
We will work to secure additional revenue from all special accounts, government funds, and other sources by reassessing each one from the ground up to identify government resources that can be made available. By proceeding in this way, I believe we will have sufficient resources to cover our necessary fiscal needs throughout the reform process, including the finely targeted benefits linked to income and our interim measures.
In fact, since I took office, we have set clear priorities across the budget as a whole throughout the budget formulation process. Even including the fiscal year 2025 supplementary budget, we kept the total amount of fiscal 2025 government bond issuance at or below the amount issued in fiscal 2024. And, in the fiscal 2026 budget, we have been able to keep new government bond issuance under control, including by keeping new government bond issuance in the national general account budget below 30 trillion yen for the second consecutive year.
Therefore, we have been engaged in fiscal management that gives due consideration to maintaining both fiscal sustainability and market confidence. Going forward, we will continue to adhere firmly to these principles, grounded in our Basic Policy on Economic and Fiscal Management and Reform.
By making these efforts, we will work responsibly to ensure that there is no impact on social security, for which the consumption tax is a critically important funding source.
That is all from me. We will continue to pursue these efforts from now.