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KYODO

A government panel tasked with reforming the social security and tax systems is inclined toward proposing a hike in the consumption tax to around 15 percent or more from the current 5 percent, members have said.

The tax hike is unavoidable because social security expenses have continued increasing by more than ¥1 trillion a year as a result of the rapidly aging population, while the panel believes all generations should shoulder the financial burden of social security reform, they said Thursday.

The panel, which will resume intensive debate next week in a bid to work out reform proposals in June, has so far agreed to limit the use of revenues from the consumption tax to social security programs. It will also review the income and property tax rates in order to lessen the excessive reliance of social security programs on the consumption tax.

To restore the nation’s fiscal health while reforming the social security and tax systems, the panel hopes to map out a plan as early as possible for the best use of financial resources by prioritizing goals.

Currently members of the ruling Democratic Party of Japan are considering to raise the unpopular tax to 8 percent for about three years to fund reconstruction of the disaster-hit areas of eastern Japan.

Some government officials, however, have argued that the sales tax should be fixed at 8 percent to fund growing social security measures even after the disaster reconstruction measures are finished, with an eye for further hike in the levy.

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