Japan has approved a draft law that would temporarily lower the consumption tax on food and beverages and set up an income-linked cash benefit scheme for people on low incomes, with the aim of passing it during the current session of parliament.

Under the plan, the tax on food and drink products would fall from 8% to 1% for two years starting next April, alongside annual payments to low- and middle-income earners.

It would be the first cut of its kind since the consumption tax was introduced in 1989. The government hopes to have the legislation enacted during the current extraordinary session of parliament, which runs until 12 December.

The measures are presented as the best way to provide quick relief to a public under inflationary pressure. The move is expected to reduce tax revenue by about 10 trillion yen, equivalent to 63 billion dollars, over the two years.