The plan only stokes anxiety about the future.

Tax modifications and spending plans for next fiscal year have likely deepened anxieties among taxpayers about the inevitable increase in their financial burden.

The ruling coalition led by the Liberal Democratic Party has decided to reduce the fixed-rate tax credits as part of its tax adjustments for fiscal 2005. If the tax breaks, introduced in 1999 to revive the sagging economy, are scrapped altogether, taxpayers will face an increase in their tax bills of up to 290,000 yen.

The ruling coalition's outline of the tax changes was preceded by a call from the government's Tax Commission for a hike in the consumption tax.

All these moves herald the arrival of an era of steadily growing tax burdens. Everybody knows the cutback on the tax credits is only the first in a long and painful series of measures.

This gloomy tax outlook notwithstanding, the draft budget for next fiscal year offers no change in the already unsustainable political tradition of massive pork-barrel spending.

Tax allocations to local governments to plug holes in their budgets are bloated after years of public works extravagance to prop up the faltering economy. But the central government has decided to maintain the current level of tax grants despite the urgent need to trim the fat.

The fiscal blueprint does nothing to chop swelling social security programs, which soak up a quarter of overall expenditures, allowing this big chunk of government spending to top 20 trillion yen next year for the first time. Proposed cuts in related clerical expenses will make no visible dent in the budget-busting social security outlays.

This is because the structure of the public pension system, which automatically increases pension payouts when the aged population grows, remains unchanged. If no action is taken to reform the system, overall social security spending will reach a staggering 33 trillion yen in fiscal 2014, according to one estimate.

The budget also fails to sharply pare down public works spending. New money will be provided for such dubious projects as new Shinkansen lines and a new runway at Kansai International Airport in response to a loud chorus of calls from the local communities. The budgeting of the mammoth projects ignores growing skepticism about the government's projections of demand for these new infrastructures.

The economic recovery has increased tax revenues by a surprisingly large 2.3 trillion yen from the previous year. Has this windfall blunted the sense of crisis among budget drafters within the Finance Ministry? Even though they have assessed the budget requests meticuously, no important change has been made to the overall budget structure.

Taxpayers cannot easily accept the government's request to shoulder the increasing burden of an aging population. That is because the government has made no serious effort to overhaul the outdated and untenable budget process.

Unless the government totally changes the way it compiles its budget, the same fiscal absurdity will continue forever.

What the government must do now is present taxpayers with convincing projections about the amount of money needed to finance various programs along with a clear plan for spending cuts. Then, taxpayers will understand what kind of benefits they will receive in exchange for increased tax payments while making necessary decisions for their own future.

In 1997, a law for fiscal restructuring was introduced to clean up the government's balance sheet. But the legislation was put on hold because of the banking crisis and the economic downturn in the ensuing years. It is still gathering dust on the shelf.

Unless serious budget reform is carried out to introduce a rigorous fiscal framework to cap spending on social security and subsidies for local governments, Japan's public finances will sink deeper into debt.

The time has come to consider new legislation to force the government to set numerical targets for fiscal reconstruction and trim spending to achieve these goals.

--The Asahi Shimbun, Dec. 21(IHT/Asahi: December 22,2004)