Japan must reform social security, finances simultaneously: Govt panel draft

TOKYO (REUTERS) - Japan must simultaneously reform its social-security system and its bloated public debt, a draft report by a government panel said, potentially putting pressure on Prime Minister Shinzo Abe to proceed with a plan to raise the national sales tax.

The two reforms must go together in order to avoid passing the burden of social-security spending for the rapidly ageing society on to future generations, said the final draft of the report, seen by Reuters on Monday.

The panel on social-security and fiscal reform is to present the report to Mr Abe on Aug 8.

Mr Abe faces a tough decision by this autumn on whether to go ahead with the first stage of a planned doubling of the sales tax to 10 percent over two years.

Some advisers want the premier to water down or delay the tax hike so that he may prioritise economic recovery. But Mr Abe has said he is also aware of the need to show financial markets that the government is serious about tackling its bloated debt, which at well over twice Japan's GDP is the heaviest debt burden in the industrial world.