AP

TOKYO JAPAN’s lower house voted on Tuesday to double the country’s sales tax to 10 percent over three years in a bid to rein in a bulging national debt as an aging population burdens the country’s social security system.

The vote, however, shook Prime Minister Yoshihiko Noda’s grip on power because of strong opposition from a group within the ruling party led by power broker Ichiro Ozawa that believes the tax hike will weaken the economy.

Ozawa and his supporters have threatened to bolt the Democratic Party over the tax issue.

The bill passed easily by a vote of 363-96, with support coming from the two biggest opposition parties. The bill must still pass the less powerful upper house to become law, which is expected.

It calls for raising the sales tax from 5 percent to 8 percent in 2014, and then to 10 percent in 2015.

Noda, who has been in power only since last September, has said the tax hike is needed to reduce Japan’s bulging national debt, which is more than twice its gross domestic product. He has made the tax increase the centerpiece of his efforts to tackle Japan’s structural woes.

“We made a first significant step toward the future,” Noda told reporters after the vote. “It is painful to have to ask the people to share the burden. ... I wish I could avoid this measure.

But somebody has to support the social security system, which benefits everyone.” Finance Minister Jun Azumi said he hoped the vote would send a message to the world that Japan is dealing with its economic problems. “I think this shows the international community that although we had been criticized as indecisive, we are taking action,” he said.

Japan was hit hard by last year’s devastating earthquake and tsunami, but has been sputtering for years with a stagnant economy and one of the largest public debt burdens in the developed world. The country’s aging population has strained its social security and tax systems, with Japanese aged 65 and older now making up about a quarter of the population – a figure projected to rise to 40 percent by 2050.

Even Noda’s government projects the tax hike will take only a modest bite out of Japan’s deficit. The Cabinet Office forecasts that doubling the sales tax will boost revenues by 13.5 trillion yen ($170 billion) annually by 2015.

Japan currently runs a deficit of about 45 trillion yen ($563 billion) a year.

Some economists warn that the tax increase will weaken consumer demand at a time when wages are stagnant and people are already holding back on spending. Key auto and electronics exporters, meanwhile, have been battered by a strong yen, natural disasters that have disrupted supply chains, and intensifying competition from Asian rivals.

While last year’s tsunami disaster made many Japanese more willing to make sacrifices to help their country recover, they are concerned about how the higher taxes will affect their personal finances.