Koizumi may decide to raise consumption tax

''It is possible in a way that does not go against the premier's pledge, such as by implementing it three years from now,'' Hosoda said in a news conference. He was referring to Koizumi's pledge not to raise the tax rate during his tenure as president of the Liberal Democratic Party, which is due to expire in September 2006.

Hosoda's advisory panel is slated to hold its first meeting Friday to discuss ways to reform the public social security system into one sustainable in Japan's aging society.

The panel is expected to compile a report by the end of this year, possibly including a call for a consumption tax hike to cover rising expenses, Hosoda said.

''It may be determined necessary after expenses for medical care, care for the elderly, and pensions are re-estimated and streamlined as a whole,'' he said.

Asked whether a decision during Koizumi's tenure contradicts his pledge, Hosoda mentioned that time is required for national debate and mapping out specifics for such a contentious tax hike.

The government introduced the consumption tax in 1989. The rate was initially 3 percent and raised to 5 percent in 1997.

Stressing spending cuts over hiking the consumption tax, Koizumi has said circumstances do not allow a consumption tax hike during his tenure.

He said in an interview in June that it is ''impossible'' even to decide to what extent the tax rate should be raised while he is in office.

Source: Agencies