Taxpayers are likely to face their biggest direct income tax hike in 50 years-and this time there won't be a cushion to soften the blow.

Since the end of World War II, major tax increases have been largely offset by cuts in other areas.

However the government Tax Commission this week indicated that those days are gone.

Hiromitsu Ishi, commission chairman, said Tuesday that in its next round of tax reform recommendations, the commission is looking to target individuals. He said that the ``main axis'' of a report due for completion by the end of the month will be increasing the tax burden.

The move marks a major about-face for the commission, which until now has focused largely on structural changes to the income and corporate tax systems.

``There is a need to move away from the traditional thinking of rebuilding the fiscal structure through increases in tax revenues brought about by economic recovery stimulated through tax cuts and public works projects,'' Ishi said.

He added that it was time the Tax Commission issued recommendations that showed it was serious about correcting the nation's fiscal structure.

``It will be most important to gain the trust of the market by increasing the tax burden based on the major precondition of cuts in government expenditures,'' he said.

On Tuesday, a commission subcommittee agreed to reduce and eventually do away with fixed percentage income tax cuts from January 2006.

Without the benefit of tax cuts, those who fall into higher tax brackets could see their annual tax bills climb by about 290,000 yen annually. For the government's coffers, that amounts to an extra 3.3 trillion yen in tax revenue per year.

A Finance Ministry official defended the decision saying: ``Unless we review the fixed percentage tax cut, which benefits income earners in the middle to high ranges, we cannot begin to enter into debate on increasing the consumption tax rate.''

He added that any move to increase the consumption tax rate would involve a wider range of tax increases since it would cover all consumers, even those in lower income brackets.

It is not the first time the Tax Commission has made noises about raising the consumption tax. In the past it has indicated it should be hiked to at least 10 percent.

Although a separate, lower consumption tax rate for food and other daily necessities has also been mooted, Ishi said that proposal would likely not be included in the commission's forthcoming recommendations.

He said a separate tax would pose a host of difficulties, including how to collect taxes for products subject to different rates.(IHT/Asahi: November 4,2004)