Prime Minister Sanae Takaichi will be pressed to honor promised tax cuts and spending plans after a historic win in Japan’s snap general election. Takaichi’s ruling Liberal Democratic Party (LDP) romped to victory in Sunday’s poll, helped by a pledge to ease household living costs by suspending the 8% food sales tax for two years – a move she has described as her “long-cherished dream.”
Investors have baulked at the lack of clarity over how Japan, which has the highest debt burden in the developed world, would fund the proposal. The uncertainty has triggered a selloff in government bonds and pushed the yen towards historic lows against other currencies.
Some analysts suggested that Takaichi’s strong mandate might give her leeway to retreat from the plan, while opposition parties advocating even bolder tax cuts suffered heavy defeats at the ballot box.
But the premier pushed back against that view in a series of brief television interviews as results rolled in on Sunday, saying she would move with speed to realize the LDP’s pledge to suspend the levy, according to Reuters.
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