The government on Thursday announced a social security reform plan that includes a proposal to gradually double the consumption tax to 10 percent by fiscal 2015. Here are some basic questions and answers about the proposed tax hike.
Why does the government think the tax has to be raised?
The main reason is the aging population, which is rapidly swelling social security costs. The government says it cannot continue sustaining welfare services with the current level of tax revenues. Issuing debt is an option, but not necessarily the best one because of the deteriorating state of Japan's fiscal health.