Japan's government is currently exploring the potential implementation of a zero percent consumption tax on food products. While this course of action could stimulate spending and reduce cost pressures on households, it also raises significant fiscal challenges as alternative sources of revenues must be found to offset the loss. The debate on the feasibility and impacts of this policy is underway among stakeholders and policymakers.
Japan's sales tax hike in 2019 has been a contentious issue, especially considering the aging population and stagnant wage growth. Implementing a no-tax policy for food items could alleviate daily cost pressures on households, particularly low-income ones. However, Japan's ongoing budget deficits and the highest debt-to-GDP ratio globally make finding alternative revenue sources crucial.
In the US, sales tax varies by state, and some states do not tax food items or offer lower tax rates, viewing it as essential spending. Meanwhile, most EU countries levy value-added tax on food products, with rates varying depending on the product's necessity, environmental impact, and socioeconomic implications.