The head of the government's tax panel said Friday that the panel will start debating an overhaul of the nation's income tax system scheduled for fiscal 2005 and beyond.
The reforms will probably lead to income tax hikes in the future amid a continued tax revenue shortage, the panel indicated.
"We cannot avoid raising the income tax in the next 10 to 15 years," Hiromitsu Ishi, head of the Tax Commission and president of Hitotsubashi University, told a news conference after the panel's first meeting of the year.
Ishi said income tax levels are too low in comparison with those of other industrialized nations, with the current maximum rate standing at 37 percent.
Ishi added that in the next couple of years, the government needs to abolish temporary income tax cuts for middle-income earners, which were introduced as part of an economic stimulus package in fiscal 1999, ahead of a possible increase in the consumption tax, which currently stands at 5 percent.
Late last year, the ruling coalition finalized an annual tax reform package that vaguely advocated a consumption tax hike in fiscal 2007 as a means of saving the nation's ailing public pension system.