Speaking after the cabinet meeting on September 8, Japan's finance minister reiterated that the country will pay for its planned two-year cut in the consumption tax on food and beverages to 1% through budget reform, not through special deficit-financing bonds. He tied the pledge to the basic policy set out in an August 5 cabinet decision under the Takaichi government's budget reform drive, saying the funding stance "has not changed at all from the start".
The mechanics, as the finance minister described them: the ministry will size the budget it can afford while steadily lowering the debt-to-GDP ratio, run a zero-base review of tax breaks, subsidies and non-tax revenue for additional funds, and only then fix full-year issuance of Japanese government bonds across the initial and supplementary budgets with market confidence in mind. He also said Japan will break from its recent habit of leaning on supplementary budgets, limiting them going forward to genuinely urgent measures. Recent supplementary budgets have carried roughly ¥3tn for price-relief spending, he said, and that money will be reworked now that income-linked benefits and the tax cut itself are meant to do the job of countering high prices. A reporter at the briefing put the annual financing need for the tax cut, including benefits, at about ¥5tn; he did not confirm or dispute that figure directly.
On Japan's version of the US spending-cut review known informally as the Japan-version DOGE, a reporter noted that ministries' initial budget requests reflected self-reviews that eliminated only three tax breaks, with no notable cuts to subsidy funds. He pushed back on the results, saying the eliminations and reductions ministries have proposed so far involve only trivial revenue losses or programs that see no real use anyway. He said the finance ministry will not simply accept those self-assessments, calling the current requests just the first stage of a broader review that will continue through the tax-reform process, with an eye to re-ranking spending priorities.
On the yen, he declined to comment on specific levels, after a reporter asked whether market speculation about a review of the Government Pension Investment Fund's portfolio, last revised in March, explained the currency's recent rapid appreciation. He said Japan's response stance is unchanged since the coordinated Japan-US intervention, when the US Treasury secretary issued a companion statement in Washington on August 3, and that Tokyo remains in close contact with the US Treasury. Wearing his other hat as the minister overseeing financial services, he also said the Financial Services Agency is watching how lenders explain the risks of ultra-long, 40- and 50-year mortgages, given that a rise in variable rates could sharply increase monthly and total repayments. He declined to go further while the agency's financial administration policy is still being drafted, saying half-formed comments at this stage could cause misunderstanding.