{"text":[[{"start":7.88,"text":"Japanese Prime Minister Sanae Takaichi has said she will proceed with plans for a two-year cut in sales tax on food and soft drinks, in a move designed to ease cost of living pressures but which some analysts fear could strain public finances and rattle markets."}],[{"start":23.8,"text":"Takaichi told leaders of the ruling Liberal Democratic Party on Thursday to put in place plans to cut the sales tax from 8 to 1 per cent from April 2027, a senior party official said. Legislation is expected to be brought before parliament in the autumn."}],[{"start":38.96,"text":"The tax is expected to revert to its current level in April 2029, LDP secretary-general Shunichi Suzuki said, adding that the prime minister intended “to ensure the necessary financial resources without relying on special deficit-financing bonds, in order to maintain market confidence”."}],[{"start":56.04,"text":"Takaichi’s hope is that the policy, which estimates suggest could cost the government ¥5tn ($31bn) a year, would be funded in part by rising tax revenues, in turn helped by higher inflation and nominal growth."}],[{"start":69.88,"text":"The policy and the lack of clarity over the funding have fuelled fears about Japan’s fiscal position, with investors already concerned about the country’s weakening currency, rising bond yields and its exposure to high oil prices."}],[{"start":82.2,"text":"“At the same time [as the tax is cut], income-linked, finely targeted benefits would be introduced in advance to offset the remaining 1 percentage point of consumption tax on food and beverages for eligible households. Together, these measures would effectively eliminate the consumption tax burden on food and beverages,” said Suzuki."}],[{"start":100.88,"text":"The plan is to then bring in a more finely targeted benefit system linked to income by April 2029."}],[{"start":107,"text":"But Masayuki Nakajima, senior strategist at Mizuho, said that “once reduced, restoring the tax rate could prove politically difficult”."}],[{"start":114.9,"text":"“As such, the discussion has important implications not only for short-term economic support but also for the sustainability of Japan’s social security system and its long-term fiscal sustainability.”"}],[{"start":126.12,"text":"The policy is seen as particularly important for Takaichi, who had pledged to suspend the consumption tax on food entirely in the run-up to her landslide election victory last year."}],[{"start":135.88,"text":"Takaichi’s popularity has fallen sharply in recent weeks, with a Nikkei poll this week showing a 10 percentage point drop to 58 per cent, with some voters frustrated by her perceived lack of focus on the cost of living."}],[{"start":150.56,"text":"Despite the slide, Takaichi is still in a better position than many of her predecessors at this stage in her tenure. The average for the other 11 prime ministers of the past quarter century was 40 per cent at the equivalent point in their terms, according to Nicholas Smith, an analyst at CLSA."}],[{"start":169.28,"text":"“Expectations have been high, with people thinking that she can maybe save those who suffer from great economic difficulties . . . but people have been looking at her potential instead of her actual ability to lead politically,” said Mieko Nakabayashi, professor of political science at Waseda University."}],[{"start":186.48,"text":"“I think Ms Takaichi believes that if she can materialise the consumption tax, then all the regional supporters will come back and see her as a person of belief and consistency. However, it is up to the people of Japan to decide if [the policy] is great for long-term economic health,” added Nakabayashi."}],[{"start":210.04,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785398295_6476.mp3"}