Takaichi Getting Down to Business

Takaichi Goes for the Consumption Tax Cut

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
March 2, 2026
 
Prime Minister Sanae Takaichi has, not surprisingly, interpreted the sweeping victory by the Liberal Democratic Party (LDP) in the February 8 Lower House election as a green light from voters to pursue her policy agenda. Most recently, she announced in the Diet debate on February 27 her intention to submit a bill for a two-year moratorium on the consumption tax on food. Certain opposition parties remain skeptical about the process for discussion through a nonpartisan “national council,” even though they are not completely opposed to the idea of a consumption tax cut. Still, the first half of this Diet session is likely to focus on the consumption tax cut.
 
The Diet held three days questioning Takaichi in Plenary Sittings of both chambers between February 24 and 26. Unlike the other opposition parties, the leaders of the Centrist Reform Alliance (CRA), Jun-ya Ogawa, and the Democratic Party for the People (DPP), Yuichiro Tamaki, called on Takaichi to discuss the consumption tax cut in the Diet and not in a national council.
 
What exactly is the “national council”? In her policy speech to the Diet in October 2025, Takaichi proposed establishing a national council to discuss comprehensive reform of the social security and taxation systems. The council’s work would include designing a system for “tax credits with benefits.” She hoped the council would be a nonpartisan discussion body. Takaichi had to get approval from the opposition parties for her agenda, because her government was in a minority at the time.
 
On January 26, the day before the official announcement calling for the Lower House election, Takaichi expected the national council to include the consumption tax cut in its agenda. Although she had originally opposed a consumption tax cut, Takaichi suddenly changed her mind when the opposition parties included it in their platforms. After the Lower House election, Takaichi said that the ultimate goal for the council would be tax credits with benefits. A temporary moratorium of the consumption tax on food would be a provisional measure before the council introduced the broader tax-with-benefits framework.
 
The CRA and DPP are basically supportive of the tax credit with benefits. However, the consumption tax cut is more important to these two parties. The CRA included the permanent elimination of the consumption tax on foods in their election platform. The DPP took a slightly different tack and argued in the campaign that the consumption tax rate should be reduced from 10 percent to 5 until the rate of wage hike steadily exceeds the price inflation rate.
 
Given their skepticism about a nonpartisan forum rather than debate directly in the Diet, the CRA and the DPP refused Takaichi’s invitation to the first meeting of the National Council on Social Security that was convened on February 26. They were concerned that Takaichi would attribute a failure to introduce a consumption tax cut on food to the opposition parties if the discussion in the council fell into confusion. The two parties know even some LDP members are negative on a consumption tax cut.
 
The national council thus embarked on its work without the participation of the two major opposition parties. Takaichi did not invite the Japan Communist Party, Reiwa Shinsengumi, and Sanseito because she believed their views were inimical to the idea of tax credits with benefits. As a result, the “national council” is essentially partisan: its members are only the LDP, its coalition partner, the Japan Innovation Party, and one small opposition party, Team Mirai.
 
Takaichi has not, however, abandoned having the opposition parties join in the introduction of a consumption tax cut. Takaichi took one step forward in a discussion in the Committee on Budget of the Lower House on February 27. She said she would submit a bill for a two-year elimination of the consumption tax on food at an extraordinary session of the Diet this coming fall. She also revealed a new idea of a flexible application of the consumption tax in the event of a major natural disaster or the outbreak of an infectious disease.
 
Takaichi shows herself to be careful to listen to the opposition parties on the consumption tax cut, notwithstanding the LDP’s supermajority in the Lower House. Her party does not have a majority in the Upper House. Pushing her agenda in the Lower House could result in protests from the opposition powers in the Upper House – which would waste time in the legislative process.
 
On other issues, Takaichi is acting on her own conservative agenda. In the budget committee discussions, she pushed for limiting imperial succession to male offspring in the male line. She also rejected any role for the Diet in reviewing the export of weapons to foreign countries after abolition of the five-category regulations. Her view is that the export policy decision should be left solely to the prime minister and her administration.
 
In the Diet discussions, the opposition parties also questioned Takaichi’s distribution of 30,000-yen gifts on catalogue to the LDP winners in Lower House election. Although former prime minister Shigeru Ishiba apologized for similar gifts he made to some winners in the 2025 Upper House election, Takaichi refused to do so, arguing that her gifts violated no law. Takaichi does not look vulnerable to a money scandal – so far.