By Megumi Fujikawa

TOKYO--Japan's prime minister used her victory speech to reaffirm that she will press ahead with a tax cut, a campaign promise that has proved popular with voters but stoked fiscal worries.

After leading the ruling party to a landslide victory in the lower house parliamentary elections on Sunday, Sanae Takaichi has a much stronger mandate with which to carry out her vision for Japan.

At a news conference Monday, the prime minister said she aims to set up a cross-party council as soon as possible to discuss her idea of suspending the 8% national consumption tax on food and beverages for two years.

"I would like to wrap up interim findings by summer," she said.

Takaichi reiterated that the government won't rely on issuing deficit-financing bonds to fill the fiscal hole left by the tax cut.

According to Ministry of Finance estimates, suspending the levy would create an annual revenue shortfall of about 5 trillion yen, equivalent to roughly $32 billion.

Takaichi's comments could fuel market anxiety over the measure, which some worry will worsen the country's financial health. That has already weighed on the yen and triggered a sell-off in Japanese government bonds, though others say the government is in a good position to fund the sales tax suspension.

Takaichi also promised to build an economy resilient to foreign-exchange fluctuations, saying that a weak yen has both positive and negative effects, and that the government will continue to pay attention to currency market movements.

The ruling Liberal Democratic Party's historic win gives it a supermajority in the lower house, which analysts say allows it to override the upper house, making it easier for Takaichi to pursue a more aggressive policy agenda.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

February 09, 2026 05:30 ET (10:30 GMT)

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