Japan's prime minister, Sanae Takaichi, has encountered an unexpected obstacle in her plan to ease the cost-of-living crisis by cutting the sales tax on food: the nation's cash registers are not equipped to handle a zero percent tax rate.
Tax Cut Promise Stalls
During the February election campaign, Takaichi's Liberal Democratic Party (LDP) promised to temporarily suspend the 8% consumption tax on food for two years, aiming to implement the change by March next year. However, manufacturers of cash register systems say the devices at major retail chains were never designed to calculate a tax rate of zero, and a major overhaul could take up to a year.
Government Blames Technology
In a parliamentary committee on 11 May, Takaichi described the situation as an “embarrassment for Japan” and “pathetic that we can’t even flexibly change tax rates when a pandemic or major disaster occurs.” She attributed the delay to the inflexible machines.
Critics, however, argue that Takaichi is using the technical issue as a delaying tactic while the finance ministry seeks ways to fund the tax suspension. Japan's public debt-to-GDP ratio is the highest globally, at about 230%, and the tax cut would cost around 5 trillion yen ($31.5 billion) annually.
Compromise Proposal
A potential compromise has emerged: reducing the tax on food to 1% instead of zero, which could be implemented in five to six months. This would nearly fulfill the campaign promise while reducing the cost by nearly $4 billion.
Opposition parties and commentators note that Takaichi herself had previously acknowledged that adjusting cash registers would take time, fueling suspicion that the “register wall” is being used to postpone the cut.
