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2008年12月12日 (金)



--The Asahi Shimbun, Dec. 11(IHT/Asahi: December 12,2008)

EDITORIAL: Social security costs


The government finally decided to raise the ratio of state financing of the basic portion of pension benefits to one-half in April from the current one-third.


But a key issue remains unsolved: how to ensure stable, long-term funding for the measure. This is a far tougher problem facing the government.


The expansion of state financing of basic pension payouts requires 2.3 trillion to 2.5 trillion yen annually. For next fiscal year, the government and the ruling coalition plan to raise the money by tapping the reserve fund surplus, or maizo-kin (buried money), in the special budget account for the government's fiscal investment and loan program.


But dipping into the reserve will effectively mean issuing additional government bonds because the surplus is supposed to be used for redeeming previously issued bonds. It will be at best a temporary fix. Where is the funding plan for the second year and beyond?


The public pension program is not the only component of the nation's social security system that poses a serious fiscal challenge for the government. Expenditures for health-care and nursing-care services will continue to grow as the nation's population ages.


The government's policy of curbing natural growth in social security spending has led to some serious cracks in the system, such as a shortage of doctors and nursing-care workers. Fixing these problems will also require money.


The government's National Commission on Social Security has estimated that total social security spending by the central and local governments will balloon to 43.5 trillion to 44.3 trillion yen in fiscal 2015, compared with 27 trillion yen in fiscal 2008.


The question is how to finance such rapid growth in social security spending. A comprehensive answer to this question is expected in a medium-term tax reform program being compiled at the instructions of Prime Minister Taro Aso. But the outlook for the tax reform blueprint is getting murky.


With a Lower House election looming large, ruling camp lawmakers are becoming increasingly unwilling to talk about any tax hike, even a future one.


Kaoru Yosano, the economic and fiscal policy minister, is in charge of the work to draw up the blueprint for midterm tax reform. He has argued for a hike in the consumption tax rate to 10 percent in the mid-2010s from the current 5 percent. But it now seems politically difficult to ensure that the program will contain a specific numeral target for raising the consumption tax rate.


As for the question of when the levy should be increased, Aso initially proposed a hike in three years. But the political relevance of his proposal is now in question because his support within the ruling camp has wilted.


We can understand the difficulty of mapping out the future for the nation's tax system at a time when the world is lurching toward a synchronized recession. But using the darkening economic outlook as an excuse to shelve the crucial issue of how to finance growing social security spending would only deepen public anxiety about the future.


The administrations of former Prime Minister Junichiro Koizumi and his successors have repeatedly promised a fundamental reform of the tax system. But the government has consistently postponed tackling this policy challenge in the face of opposition from ruling coalition lawmakers who fear they will lose their Diet seats if they approve a tax hike.


The economic situation may require a delay in a tax hike plan. But such a possibility should not give the government an excuse to sidetrack the job of crafting a plan for an inevitable tax increase. The ruling camp's consistent attempt to avoid confronting the reality of the growing social security burden is the problem.


If Aso claims he is willing to confront this reality, he should come up with a convincing proposal for the issue. And he should formalize the proposal with an official Cabinet endorsement and submit a bill to carry out his plans to the Diet.


The situation offers a great opportunity for opposition Minshuto (Democratic Party of Japan) to present its own vision for the future of the nation's social security system. Voters are longing to see a healthy competition among the parties to offer a reassuring plan for a solid social safety net.



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