• Kyodo News


The government launched a panel of experts Saturday to support Prime Minister Naoto Kan’s efforts to strengthen the social security system, an initiative that could be followed by a tax hike to cover its revenue shortfalls.

Kan, who chairs the new panel, has said he will seek comprehensive reforms as he tries to make the welfare system more sustainable at a time when the population is aging and annual new debt issuance is surpassing its tax revenues.

“Politicians have a great responsibility,” Kan said at the inaugural meeting of the panel, pointing out that all similar attempts at reform by previous governments have failed.

He added that debate on reform must go “beyond the framework of politics,” and called on every section of society to address the issue more actively, saying, “The public has increasingly understood” the severity of the current situation.

The panel, which involves ministers and representatives from businesses, labor unions and academia, will play a key role in Kan’s efforts to compile a reform plan by his self-imposed deadline of June.

It is widely believed that the panel, through hearings and debates, will aim to reach a public consensus on raising the consumption tax in several years’ time, although doing so could adversely impact the economy by slowing private consumption and weakening corporate appetite for capital spending.

The discussions will effectively revolve around economic and fiscal policy minister Kaoru Yosano, who strongly advocates increasing the sales tax rate from the current 5 percent to cover swelling social security costs, which amount to more than half of the government’s key policy spending.

At a news conference following the panel’s meeting, Yosano said that without reform, it will be almost impossible for the government to sustain the nation’s public finances and social security. In an effort to get the opposition camp on board, he also said the problem can’t be solved by a single political party.

Yosano, a defector from the once-dominant Liberal Democratic Party, joined the Cabinet following a call by the prime minister, head of the Democratic Party of Japan, for nonpartisan talks. The opposition camp, however, has largely given a lukewarm reaction to Kan’s initiative and criticized Yosano’s entry into the government.

Other members of the panel include Hakuo Yanagisawa, president of Josai International University and a former LDP welfare minister. He has proposed that revenues from the consumption tax be used only for financing welfare services.

Another member, Yutaka Narita, top adviser to advertising agency Dentsu Inc., used to chair a similar panel set up under a previous LDP-led government, while Taro Miyamoto, a law professor at Hokkaido University, is known for his study of social security systems in northern Europe.

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