Consumption tax rate 10% Tax rate increase and fiscal reconstruction October 1 0:47

The aim of raising the consumption tax rate is to secure stable financial resources for social security expenses that continue to expand, and to rebuild the worst level of finance in developed countries.

Social security expenses such as pensions, medical care, and nursing care account for about one-third of expenditures, and continue to increase every year in excess of tax revenues against the backdrop of aging.

In order to cover this, the government continues to issue new government bonds as debt, and the combined debt between the country and the region is expected to reach 1122 trillion yen at the end of this fiscal year.

This time, half of the ¥ 5.7 trillion increase in sales expected from the tax rate increase will be used for fiscal soundness to secure stable financial resources for social security.

The reason for increasing the consumption tax rather than other taxes is that tax fluctuations are smaller than income taxes and corporate taxes, which have a large fluctuation in tax revenues due to the economy, and are considered suitable as a stable financial source.

In fiscal 2025, one of the goals of fiscal consolidation is to make it possible to cover the necessary expenses for policies with tax revenues without relying on debt.

However, the Cabinet Office estimates that even if economic growth is higher than it is now, a deficit of 2.3 trillion yen will remain in FY2025, and the actual situation is that the target is not expected after the tax increase.

Furthermore, in 2025, six years later, all so-called “baby boomers” will be over 75 years old. The population over 75 years old is expected to reach approximately 21.8 million people, approximately 18% of the total, and social security benefit expenses such as medical care, nursing care and pensions are expected to increase by approximately 20 trillion yen from the previous fiscal year, and rapidly increase to over 140 trillion yen The

Under these circumstances, in order to steadily promote fiscal consolidation, in addition to realizing high economic growth, it is inevitable that further benefits and burdens will be reviewed.

On the other hand, Prime Minister Abe has shown that it will not be necessary to raise the consumption tax rate for the next 10 years or more, and how to make a path to fiscal consolidation will be an issue in the future.