Takaichi’s plan to cut tax on food may worsen Japan’s finances, S&P says

Prime Minister Sanae Takaichi’s proposed plan to cut tax on food purchases risks lowering Japan’s revenues and undermining the nation’s finances in the long term, according to S&P Global Ratings in a sign of its rising concerns.

“The risk of tax cuts, such as on some sales tax items, is that this is not a one-off hit, and it would lower government revenues on a sustained basis,” Rain Yin, director of sovereign ratings based in Singapore, said in a statement Wednesday.

“With a structural increase in expenditure components, this would further worsen the government’s fiscal situation if economic and revenue growth were to weaken,” Yin said.