Regarding the consumption tax cut for food and beverages, the government is working toward lowering the rate to 1% and plans to make a decision, including whether to proceed, within this month. Prime Minister Takaichi had initially proposed a 0% rate for this fiscal year, but early implementation was deemed difficult because upgrading cash registers to handle a 0% rate would take time. However, since upgrading cash registers for a 1% rate would take only about six months, a 1% tax cut has emerged as the leading proposal.

Since the 8% consumption tax is being reduced to 1%, this is welcome news for the public. While some criticize the 1% rate as a breach of campaign promises, it is far more satisfying to have the 1% rate implemented within this fiscal year than to remain stuck on a 0% rate with no clear timeline for implementation, only to have the issue swept under the rug. The Prime Minister had pledged “zero consumption tax on food and beverages for two years,” but if a 1% rate is considered a breach of that pledge, why not simply maintain the 1% rate for three years? While it would technically be a breach of the pledge, it would benefit the public, so the criticism would be unfounded. Incidentally, a 0% rate would result in an annual tax revenue loss of 5 trillion yen, whereas a 1% rate would reportedly amount to 4.3 trillion yen.

What has become clear once again in the debate over the consumption tax cut is the trouble of relying on the system. Since setting the rate to 0% would require about a year to upgrade cash register systems, the 1% rate proposal—which can be implemented in about six months—has become the practical solution.

Since its introduction in 1989, the consumption tax has seen nothing but increases, creating an unwritten rule in society that “the consumption tax only goes up.” However, this is the first time it has been demonstrated that tax cuts are possible depending on the situation. I view this as a groundbreaking development and commend the government’s bold decision.

However, the fact that we are being held hostage by systems, preventing us from implementing the policies we truly wish to pursue, is a major challenge. This is not democracy; it is systemism. Japanese society will become increasingly dependent on systems through the spread of DX and AI. This should be to strengthen democracy and the public interest, not to transition toward systemism. We need systems that ensure policy flexibility. (Kei Kitajima)

※Translating Japanese articles into English with AI