Finance Minister Sadakazu Tanigaki indicated Tuesday that he opposes New Komeito's proposal to scrap income tax cuts to allow the government to step up its contributions to the crisis-ridden pension program.
Referring to the thinking when the income tax cuts were introduced, he said, "There were two viewpoints -- that given the economic situation at the time, there was a need for (economy-boosting) steps, and that they were to be a temporary measure until fundamental tax reforms can be carried out.
"We should carefully consider if those conditions have been met (before scrapping the tax cuts)," Tanigaki said at a news conference.
Hiromitsu Ishi, chairman of the government's Tax Commission, said at a news conference the panel is unlikely to propose reducing or removing the tax cuts in its report for fiscal 2004, which will be completed by the end of the month.
While all major parties agree that the government should increase its share of the public pension burden to half from the current one-third to help stabilize the system, they have yet to agree on how to come up with the estimated 2.7 trillion yen cost.
New Komeito, which is part of the ruling triumvirate, has suggested raising the funds by ending the income tax cuts for middle income earners, which were introduced as part of tax reforms in fiscal 1999.
The Liberal Democratic Party, the biggest of the three ruling parties, has not specified how the increase could be financed.
The Democratic Party of Japan, the main opposition force, has said it would trim wasteful state spending to cover the costs.