The Political Economy of the Japanese Consumption Tax Hike in the age of aging population

This study examines Japanese citizens’ attitudes toward the consumption tax hike, focusing on satisfaction with democracy and political efficacy, outside of age. Especially, this study enhance the validity of the survey by utilizing data presumed the trade-offs between the consumption tax hike and the welfare transition for all generation. Using data from the “Democratic Fragmentation and the Role of the Electoral System” survey conducted in January and February 2018, this study empirically demonstrates that age, satisfaction with democracy, and political efficacy have a significant impact on citizens’ attitudes toward the consumption tax hike amid the tax and welfare reforms. First, this study empirically find that those in their 20s and 30s are more supportive of tax increases than those aged 65 and older. Next, this study show that satisfaction with democracy and political efficacy, which have been neglected by previous studies, are positively and statistically significantly related to tax increase attitudes. The significance of this study has several implications. While previous studies have focused on analyzing the axis of burden-benefit conflict centered on generation and income, we show that despite this conflict, satisfaction with democracy and political efficacy can serve as mechanisms to mitigate this conflict. It shows that governments need a wellfunctioning democratic governance system and a sense of trust and efficacy to mobilize citizen support for comprehensive reforms including taxation and welfare re-calibration.