If agreed by parliament the package of reforms will see consumption tax rise to 8.0 percent in April 2014 and to 10 percent in October 2015 from the current 5.0 percent.

Finance Minister Jun Azumi told reporters that the government planned to submit related bills to parliament in March. But the legislation is expected to face a rocky road as opposition parties, as well as some lawmakers in the ruling Democratic Party of Japan, are against it.

The opposition bloc controls the upper house of parliament. Prime Minister Yoshihiko Noda has warned the future of the world's third-largest economy depends on reversing the rising public debt, arguing Japan has "no time to spare" in reducing its fiscal burden.

With burgeoning pension and social security costs in a country where the population is growing older and shrinking, only around 40 percent of what the government spends is currently made up from taxes.

The rest is financed from borrowing, leaving debt at more than double the country's gross domestic product, an eyewatering ratio that dwarfs troubled Greece and will only grow unless more tax revenue is raised or spending is cut, analysts warn.