Abstract: Low fertility and population aging continue to reshape the financing base of Japan's social security system. The decline in the working-age population has constrained the capacity to pay social insurance contributions, while the increase in the elderly and oldest-old populations has driven up demand for pension, medical care, long-term care, and related benefits. As a result, the traditional financing structure relying on social insurance contributions and public funding faces long-term constraints. Based on official Japanese data on the population, social security benefits, financing structure, and the use of consumption tax revenue, this paper analyzes the institutional logic and practical boundaries of Japan's restructuring of social security financing from the perspective of the earmarking of the consumption tax for social security purposes. The findings show that the earmarking of the consumption tax for social security financing is not merely a tax-rate adjustment, but a mechanism for strengthening stable revenue sources under the combined effects of demographic change, a shrinking contribution base, and rigid growth in benefit expenditures. Through the three mechanisms of revenue stability, broader burden sharing, and earmarked use, the consumption tax has improved the sustainability and budgetary visibility of social security financing. However, although consumption tax revenue has strengthened the coverage of the four major social security expenditures—pensions, medical care, long-term care, and measures to address low fertility—it remains insufficient to independently eliminate the financing gap in social security. Japan's practice suggests that tax reform in an aging society should not remain within a single logic of tax increases, but should move toward coordinated governance involving the consumption tax, social insurance contributions, public funding, individual cost sharing, and expenditure rationalization. The implication is that social security financing reform should be grounded in demographic change and long-term expenditure responsibilities, and should establish an institutional balance among stable revenue sources, intergenerational equity, and fiscal sustainability.

Key words: low fertility and population aging, consumption tax, social security financing, all-generation social security, coordinated governance