Japan's government approved a plan to cut the consumption tax on food products from 8% to 1% for two years starting in April 2027, alongside cash payments for low- and middle-income households. The measure will reduce annual tax revenue by 4.3 trillion yen, with the government planning to cover the shortfall through subsidy cuts, revisions to special tax measures and non-tax revenue rather than special deficit-financing bonds. The tax rate will return to 8% in April 2029, when an income-linked benefit program is scheduled to be fully launched. The government plans to submit legislation to an extraordinary Diet session expected in early October and aims to secure passage by year-end. The plan fulfills a consumption-tax pledge made by the Sanae Takaichi administration during the February House of Representatives election. It comes as the 10-year Japanese government bond yield has risen above 3% amid fiscal and inflation concerns.