As the campaigning for the Sunday general election draws to a close, the debate on the consumption tax remains low key. The simple reason is that a tax increase is always politically unpalatable, especially at election time. Nonetheless, the fact that practically all parties are making it a campaign issue attests to the critical condition of public finances.

The government budget is a shambles, with nearly half of the revenue coming from bond issues. Long-term debt owed by the central and local governments is reaching a staggering 700 trillion yen -- a sum that exceeds Japan's annual economic output by a wide margin. Meanwhile, social security costs continue to rise as Japanese society ages at an accelerated pace.

Leading the debate is the opposition Democratic Party of Japan, which believes that an increase in the consumption tax -- which is levied on most goods and services -- is inevitable. The DPJ says in its policy manifesto that part of the tax revenue should be used to maintain a sustainable social security system. The New Conservative Party, a member of the three-way governing coalition, takes a similar position.