Koizumi says consumption tax will rise, but not on his watch

Prime Minister Junichiro Koizumi said Tuesday that while the consumption tax rate will inevitably be raised to cover the growing cost of social security programs, it will not happen while he is president of the Liberal Democratic Party.

Junichiro Koizumi

Koizumi will end his tenure as LDP president in September 2006. He has said on numerous occasions that there will be no consumption tax increase during his presidency.

Koizumi said during an interview with The Japan Times and other newspapers, however, that it will be necessary to raise the 5 percent consumption to cover the growing cost of public pension, medical and nursing care insurance systems.

"Looking at the cases of European countries, I think the consumption tax will be a big source of revenue," he remarked.

"But the situation will not be ripe in the coming two years."

He said the main topic of discussion concerning social security reform in the remaining years of his tenure will center around whether to integrate the separate public pension systems for self-employed workers, corporate workers and public servants.

Substantial debate on a consumption tax increase will come after that, he said.

Koizumi said he supports the introduction of a taxpayer numbering system to integrate the three separate pension systems. The identification system is considered important because it will help the government correctly grasp the income of self-employed workers.

But the LDP and its junior coalition partner, New Komeito, have said they oppose a taxpayer numbering system because it could infringe on taxpayers' privacy.

Koizumi declined to say how he would take responsibility if the LDP fails to achieve its official target of winning 51 seats in the July 11 House of Councilors election — the same number of seats the LDP has up for grabs this time.

If it fails to achieve the target, Koizumi might face pressure from some party members to step down.

"You don't have to discuss 'if' at this point," he said.