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The Liberal Democratic Party’s committee on public pension reform will study the possibility of raising the 5 percent consumption tax as a means to finance a proposed increase in the government’s contribution to the national pension program, the panel’s head said Friday.

Raising the consumption tax may be the only way to secure a stable source of revenue for the government to assume a heavier burden of the pension program, Yuji Tsushima said.

The revised pension reform law stipulates that the government’s contribution to the basic portion of the pension program be increased from the current one-third to half in 2004.

The increase is designed to save the pension system from going broke due to the rapid aging of the population.

The law calls for the government to increase its contribution after securing a stable source of revenue.

According to health ministry estimates, the government needs 2.7 trillion yen every year if it plans to raise the amount it contributes to half.

Tsushima said the government will probably not win public support for reform of the pension system unless the question of securing the 2.7 trillion yen is addressed.

Prime Minister Junichiro Koizumi has said he will not raise the consumption tax rate to finance pension reform.

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