Japan's ruling coalition partner to propose sales tax cut on food, Yomiuri reports
TOKYO, June 4 (Reuters) - Japan's junior ruling coalition partner, Komeito, will propose cutting the consumption tax rate for food items to 5% from 8% in a campaign pledge for the upper house election slated in July, the Yomiuri newspaper reported on Wednesday.
The campaign pledge, to be announced on Friday, will also include a proposal to offer cash payouts to cushion the blow to households from rising living costs, the paper said.
The proposed stimulus plan will be funded by an expected increase in tax revenues instead of additional debt issuance, according to the draft obtained by Yomiuri.
Japan applies an 8% consumption tax rate for food and 10% for other items, with the proceeds mostly used to fund social welfare costs for a rapidly ageing economy.
A proposal to cut the tax rate from Komeito, which is a junior coalition partner of the Liberal Democratic Party, would add pressure on Prime Minister Shigeru Ishiba to offer more fiscal support to voters ahead of the upper house poll.
Ishiba and senior LDP officials so far have pushed back against calls from opposition parties to cut the consumption tax rate, arguing that doing so would worsen Japan's already tattered finances.
Concern over Japan's huge public debt, which will become more expensive to finance as the Bank of Japan eyes further interest rate hikes, has been among factors that led to a surge in super-long government bond yields last month.
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