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Japan won't raise its consumption tax this year, the LDP's Abe says

Japan's ruling Liberal Democratic Party (LDP) will stick to its promise not to raise consumption taxes for at least three years although an increase will be "inevitable" to cover future pension costs, the party's secretary-general Shinzo Abe said.

Prime Minister Junichiro Koizumi, who dissolved parliament last week and called elections for Nov. 9, has pledged not to increase the 5 percent consumption tax while he's in office.

Concerns about future pension payments will be among the major issues raised by candidates during the campaign, along with how parties will cope with reform of state organizations such as postal services, analysts said.

Projections show people aged 65 or older will make up almost a third of Japan's population by 2025, up from 18 percent in 2001.

"Social securities payments will fall quickly" in about four years, Abe said on Fuji Television's Hodo 2001 program. "Raising consumption taxes is a way to tackle the situation."

Officials and economists have said the government must raise taxes to pay for social programs such as the public pension system and medical expenses as the population ages.

The Democratic Party of Japan (DPJ), the country's main opposition group, also predicts that raising consumption tax will be necessary, the party's Secretary General Katsuya Okada told the same television program.

The party expects consumption taxes will rise after the government increases the proportion it pays of pension payments to a half from one-third.

On a separate program, the ruling LDP's Abe told NHK Television that the party wants to retain its majority support in the election.

The DPJ's Okada said the party's ultimate goal is to win office and at least gain support from the LDP during this poll.

The LDP had 245 seats in total out of 480 in the lower house of parliament, and another 41 seats when coalition partners were included.

The DPJ had 137 seats before the dissolution.
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