Books and Web sites devoted to the art of economizing describe the savings per month from "recycling" leftovers by putting them in stews and tempura (2,600 yen), taking shorter showers (540 yen) and flushing toilets at low-intensity (720 yen).

That's the kind of thrift low-income households have been talking about. But raising taxes, as being debated by policymakers, will force higher-income households to start saving as well, potentially triggering a recession and paradoxically cause tax revenues to fall, economists say.

In fiscal 2005, a man earning a salary of 6 million yen to support a wife and two kids will pay 23,000 yen more in taxes and mandatory premiums than the current year, due to the end of spousal tax exemptions and increased premiums into unemployment insurance and the public pension plan.

On top of that, the ruling coalition has basically agreed, starting in 2006, to reduce the "permanent" income and residential tax cuts in place since fiscal 1999.

"The current recovery in consumption is due to an improved outlook by households," said Satoshi Shinohara, a researcher at Nissay Life Research Institute. "But it is doubtful this recovery will continue, as taxes and social security costs rise while incomes fall."

The average worker income at private-sector companies fell 40,000 yen year-on-year in 2003, down for the sixth consecutive year, according to the National Tax Agency.

Japan is still scarred by memories of a consumption tax increase to 5 percent from 3 percent in April 1997. The increase is widely blamed for cooling consumption, and derailing a fledgling economic recovery.

Financial planner Masayuki Kihira said uncertainty about the future is already hitting consumption. He blamed half-baked policies and an unwillingness by politicians to say how much exactly taxes and pension premiums will rise, and how much pension payouts will fall.

"I have young people coming in to talk about their retirement plans -- something that's never happened before," he said.

He cited revised gross domestic product numbers announced Wednesday, showing household consumption for the July-September quarter rose only 0.2 percent, compared with a previously reported 0.9 percent.

Policymakers say the tax increase trend will continue, and Japanese need to accept it.

The nation's net public debt, or total central and local government debt minus the government's total financial assets, stands at 85.2 percent of gross domestic product, according to the International Monetary Fund. That's the highest among the Group of Seven industrialized nations. The IMF projects that debt to grow to 107.2 percent of GDP in 2009.

"There will be no tax cuts in the future," Tax Commission Chairman Hiromitsu Ishi said, prior to submitting his recommendations to Prime Minister Junichiro Koizumi in late November. "The longer we wait, the more (the deficit) will grow for future generations to deal with."

The cuts in special income and residential taxes currently in place should be abolished completely by fiscal 2006, the commission recommended. The income and residential tax breaks to be rolled back reduce income taxes by 20 percent, up to a maximum 250,000 yen, and residential taxes by 15 percent, up to 40,000 yen.

But scaling back the existing tax cuts will force households to economize further, and "could very well trigger a recession," the think tank Japan Research Institute said.

The government's attempt to abolish tax breaks and use the extra revenues to support the national pension system "gives the impression that it is after revenues to keep itself afloat by taking from the most accessible source," JRI said in a recent report.