It is feared that the postponement of the consumption tax rate hike scheduled for next October will reduce funding for social security programs, because the tax and social security reform agreed on in 2012 assumes that the two-stage consumption tax rate — from 5 percent to 8 percent in April 2014 and to 10 percent in October 2015 — will take effect.
Still, efforts need to be made so that those less fortunate — low-income people needing public assistance, children from poor families and child-rearing households — will not be affected by the cuts. All parties campaigning for the Lower House election are urged to come up with concrete ideas to secure funding for these programs.
Under the 2012 agreement, tax revenue gains from the consumption tax hikes are to be used mostly for four social security-related areas — pension, medical services, nursing care for the elderly and measures to deal with the low birthrate. Reform of various social security programs will be inevitable as the cost of such services is set to balloon with the rapid aging of the population.