It appears that Prime Minister Junichiro Koizumi is pushing the consumption-tax issue onto the political agenda. During a Lower House plenary session earlier this month, he said, in effect, that the value-added tax should be increased as part of overall social security reform. Until recently, Koizumi had consistently avoided this issue since taking office nearly four years ago, vowing that he would not raise the tax while in office.

The government's Tax Commission is also taking a positive stance toward an increase. At a press conference immediately after Mr. Koizumi's statement, Mr. Hiromitsu Ishi, head of the panel, suggested that he would announce, perhaps as early as this autumn, a detailed proposal spelling out how much the tax rate should be raised and when.

The Liberal Democratic Party, meanwhile, is moving toward boosting the tax in or after fiscal 2007 -- sometime after Mr. Koizumi's tenure as LDP president expires in September 2006. To that end, the party is planning to set up an in-house council. Thus a consumption-tax increase linked to social security and fiscal reconstruction looms as the biggest policy issue after postal privatization.