The April consumption tax hike to 8 percent is expected to bring in an additional ¥5 trillion in tax revenue in fiscal 2014, but the government can use only ¥500 billion to improve social welfare.
Japan will spend all ¥5 trillion in extra revenue for the fiscal year, which starts that month, on social welfare, but much has to be allocated for contributions to basic pension costs.
Reform plans for social security and the tax system, based on a two-stage hike in the consumption tax to 10 percent, call for spending revenue from a 4-percentage-point hike in the tax, or ¥11.2 trillion, to stabilize social welfare, including financial sources for public pensions, and that from a 1-point hike, or ¥2.8 trillion, to improve welfare.