Takaichi’s fiscal push could lift growth — and Japan’s already-rising interest bill

Sanae Takaichi, Japan’s prime minister, speaks during a press conference at the prime minister’s office in Tokyo, Japan, on Wednesday, Feb. 18, 2026. Kiyoshi Ota | Via ReutersJapanese Prime Minister Sanae Takaichi has pushed forward with her plan to slash the consumption tax on food, which reportedly would be the first time the tax will be cut since its implementation in 1989 if she succeeds. On Tuesday, the ruling Liberal Democratic party advanced the bill through key committees, with Nikkei reporting Takaichi wants cabinet approval by this month, and for the bill to be tabled in parliament in the autumn.Takaichi said last Thursday that Japan would cut the tax on food to 1% from 8% for two years from April 2027, and offer cash payments to offset the impact of that 1% on select groups.The food-tax cut captures the central gamble behind Takaichi's economic agenda: Japan is giving up revenue now in the hope that stronger consumption and an estimated 370 trillion yen (2.35 trillion) public-private investment plan through to the 2040 fiscal year will help boost growth.The plan, which will cut an estimated 4.4 trillion yen in revenue from the government's coffers has already drawn criti...