A government advisory panel on taxation was planning to recommend in its triennial proposals unveiled July 14 that the consumption tax rate be hiked to 20 percent, only abandoning the idea out of concern over a probable public backlash, panel sources said Friday.

In the course of drawing up its proposals, the Tax Commission, which advises the prime minister, considered explicitly stating in its recommendations that a rate of 20 percent is needed to tackle Japan's huge fiscal deficit, the sources said.

Panel members believed the rate should be hiked from the current 5 percent in 2007, when Japan's population is projected to start declining, the sources said.