Japan's Finance Minister Katayama used his September 8 post-cabinet press briefing to reaffirm that a planned two-year cut in the consumption tax on food and beverages, to 1% starting next year, will be funded without issuing special deficit-covering bonds. That stance, first set out in the August 5 cabinet decision on fiscal policy, "has not changed at all since the start," he told reporters.
The mechanics matter more than the pledge itself. Katayama said the Takaichi cabinet's budget-reform drive will fix the full-year issuance of Japanese government bonds only after reviewing "every possible" option on both spending and revenue, while keeping the debt-to-GDP ratio on a stable downward path. On the revenue side, that means a zero-based look at tax breaks, subsidies and non-tax income to widen the funding pool for the tax cut and other fiscal needs.
Supplementary budgets take a direct hit. Katayama conceded that Japan's fiscal management "could not deny" a longstanding reliance on supplementary budgets and said the government will now confine them to "truly urgent" measures. Roughly ¥3tn of price-relief spending built into recent supplementary budgets will be reworked, replaced by income-linked benefits with the tax cut itself serving as a "bridge" measure until those benefits are rolled out in full.
On the government's "Japan-version DOGE" spending review, Katayama gave a blunt scorecard: ministries volunteering abolitions or cuts at the budget-request stage have so far proposed items involving "either very small revenue losses or ones that were never actually used." He said the Ministry of Finance will not simply wave through those self-inspections, calling the request stage only "the first step" of a longer process to be pushed further through tax-reform negotiations.
Asked about the yen's rapid appreciation, Katayama declined to comment on specific levels, as is customary, but repeated that Tokyo's response "has not changed at all" since the coordinated intervention with Washington, referencing August 3 statements by himself and US Treasury Secretary Scott Bessent. He said close communication with the US Treasury continues after the G20 finance ministers' meetings, aimed at keeping currency markets orderly.
The briefing also touched on mortgages. With ultra-long-term home loans stretching to 40 and 50 years becoming more common, Katayama said the Financial Services Agency is watching how lenders explain rate risk to borrowers, since a rise in variable rates "could substantially increase" monthly and total repayments depending on loan terms. Further detail, he said, will come in the FSA's forthcoming financial administration policy; he declined to elaborate now to avoid "half-finished" statements that could mislead.
None of this settles the harder question a reporter raised at the same briefing: how the government pays for a subsidy-and-tax-cut package that outside estimates put at roughly ¥5tn a year, including cash benefits. Katayama's answer was a process, not a number, one he says will be filled in as the budget-reform cycle advances.