S&P Sees Risk of Japan’s Sales Tax Cut Worsening Fiscal Position

Prime Minister Sanae Takaichi’s proposed plan to cut the tax on food purchases risks lowering Japan’s revenues and undermining the nation’s finances in the long term, according to S&P Global Ratings in a sign of its rising concerns.

“The risk of tax cuts, such as on some sales tax items, is that this is not a one-off hit, and it would lower government revenues on a sustained basis,” Rain Yin, director of sovereign ratings based in Singapore, told Bloomberg on Wednesday in an emailed statement.

“With a structural increase in expenditure components, this would further worsen the government’s ...