The Liberal Democratic Party-New Komeito ruling bloc said Wednesday it will not levy lower taxes on foods and other daily essentials when the 5 percent sales tax is raised to 8 percent in fiscal 2014 and instead will hand out cash allowances to low-income households.
The ruling bloc said it will "aim to" introduce special low rates for daily essentials when the tax is again raised to 10 percent in 2015, but it didn't elaborate. While New Komeito is apparently trying to placate voters ahead of this summer's Upper House election, the LDP is worried about lost tax revenues if a large part of the population gets a sales levy break.
LDP tax panel chief Takeshi Noda and his New Komeito counterpart, Tetsuo Saito, agreed on the new tack Wednesday night.