The consumption tax rate needs to be hiked to 15% by 2025 to sustain social welfare

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Japan has the grayest society among major developed countries, and the postwar baby boomers will all turn 75 by 2025. Simply, a 10 percent consumption tax will be inadequate to sustain the country's social welfare system and additional hikes will be inevitable.

The hike to 10 percent from 8 percent on Oct. 1 is focused primarily on the expansion of social welfare services and will effectively do nothing to shore up the tattered national finances. To tackle the government's mounting debt of over ¥1 quadrillion — more than twice the country's gross domestic product — a further tax hike will become crucial.