Prime Minister Junichiro Koizumi voiced opposition Tuesday to a Finance Ministry proposal that the tax on low-malt "happoshu" beverages be increased.

"There are various arguments, but I wonder how that will be viewed (by the public)," he said.

Koizumi's remarks were made in reference to the Finance Ministry's efforts to bring the happoshu tax and beer tax closer by increasing the former and reducing the latter.

"That would only be a tax hike," he continued. "It would be a bad political decision."

Finance Minister Masajuro Shiokawa also indicated Tuesday that a tax hike on happoshu is unlikely to be included in tax code revisions for fiscal 2002.

"It is best to leave to public opinion whether the tax on low-malt beer should be raised," Shiokawa told a news conference after a Cabinet meeting. He added, however, that the matter would ultimately be decided by the Diet.

Although the Finance Ministry has been pushing for a tax hike of this kind in a bid to offset an expected tax revenue shortfall during fiscal 2002, many Liberal Democratic Party members oppose the idea.

The brewing industry has also raised objections, arguing that the ministry's drive to effect a tax hike would only discourage brewers from developing high-quality products at lower prices.

As part of a campaign against the happoshu tax hike, major domestic brewers have collected more than 140,000 signatures from consumers since mid-November.

Shipments of happoshu, which looks like beer but is cheaper due to its lower tax rate, pegged to its lower malt content, have risen steadily since the beverage's introduction and now account for 30 percent of the domestic beer market.

Under these circumstances, public opinion should dictate that the hike is unlikely to be incorporated into the fiscal 2002 tax code revisions, which will be compiled later this month.

Nevertheless, Shiokawa emphasized the ministry's support of the hike, saying that he would welcome a tax increase on low-malt beer should the public support the idea.

Failing to raise the happoshu tax will likely make the fiscal policy duties of Koizumi all the more difficult.

He has vowed to cap new government bond issuance at 30 trillion yen, while the Finance Ministry estimates that tax revenues during fiscal 2002 will fall sharply.