JAPAN: Parliament approves Prime Minister's signature sales tax increase but enough rebels in the ruling party reject the plan possibly triggering early elections

Record ID: 327817

  • Title: JAPAN: Parliament approves Prime Minister's signature sales tax increase but enough rebels in the ruling party reject the plan possibly triggering early elections
  • Date: 27th June 2012
  • Summary: TOKYO, JAPAN (RECENT - JUNE 21, 2012) (REUTERS) VARIOUS OF SOPHIA UNIVERSITY PROFESSOR OF POLITICAL SCIENCE, KOICHI NAKANO, WORKING AT COMPUTER IN OFFICE (SOUNDBITE) (English) SOPHIA UNIVERSITY PROFESSOR OF POLITICAL SCIENCE, KOICHI NAKANO, SAYING: "The rebels are determined types who are voting against the government-sponsored bill on the basis of principle, and therefore they are unlikely to suddenly start backing Noda. And so I guess Noda would be likely forced out sometime soon -- and so I would expect there's going to be a change of Prime Minister, if not an election, some time before too long." MORE OF NAKANO IN OFFICE (SOUNDBITE) (English) SOPHIA UNIVERSITY UNIVERSITY PROFESSOR OF POLITICAL SCIENCE, KOICHI NAKANO, SAYING: "After he is forced out, well maybe the DPJ (Democratic Party of Japan) is torn apart, maybe it won't exist any more in the way we know it. But it's something that he probably doesn't really care all about much, because his mission as Prime Minister will be accomplished then." VARIOUS OF PEOPLE WALKING IN STREET (SOUNDBITE) (Japanese) 72-YEAR-OLD RETIREE TOSHIHIKO URATA, SAYING: "Even if everyone doesn't actually talk about the fact that the tax needs to be raised, it's something that everyone does understand. So as one first step, raising it to 10%, I think that it can't be helped." (SOUNDBITE) (Japanese) 39-YEAR-OLD YOSHINOBU SEKIYAMA, SAYING: "For large purchases, such as a house or a car and such then I do indeed feel that sort of consumption may go down. " TOKYO, JAPAN (RECENT - JUNE 21, 2012) (REUTERS) VARIOUS OF PEOPLE SHOPPING IN TOKYO
  • Embargoed: 12th July 2012 13:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Economy,Politics
  • Reuters ID: LVAB6B4TP7ZJK8Y4MS8DAK9MLAL
  • Story Text: Japanese Prime Minister Yoshihiko Noda won on Tuesday (June 26) lower house approval for his signature tax-increase plan, but enough ruling party rebels rejected the plan to threaten a break-up of the party which could trigger an early election.
    The plan to double the sales tax to 10 percent over three years is seen as a first step towards curbing Japan's snowballing public debt which already exceeds two years' worth of its economic output, a record for an industrialised nation.
    "We must give a great deal of thought to the future generations and if we do not take the first step towards reform now then I believe that it will indeed be too late. There is indeed no time to waste. That is why we must take responsibility to take these reforms and push them through," Noda said before voting on the bill.
    A compromise struck with the opposition in mid-June allowed Noda to break months of policy gridlock and secure the plan's comfortable passage in parliament by 363 to 96 votes.
    But 57 ruling Democratic Party of Japan lawmakers voted against the bill.
    If 54 or more of them left the party as a result, the Democrats would lose their majority in the more powerful lower house, raising the prospect of an election well before the next one is due by mid-2013.
    "The rebels are determined types who are voting against the Government-sponsored bill on the basis of principle, and therefore they are unlikely top suddenly start backing Noda. And so I guess Noda would be likely forced out sometime soon -- and so I would expect there's going to be a change of Prime Minister, if not an election, some time before too long," Sophia University associate professor of Political Science Koichi Nakano explained in the aftermath of the vote.
    Critics, led by former Democrat leader Ichiro Ozawa, 70, credited for masterminding the party's 2009 election triumph, argue the tax increase is a departure from a party platform that promised to curb the powerful bureaucracy and cut wasteful spending before raising taxes.
    Ozawa has suggested he could leave and form a new party with his followers, although Nakano said that with the tax hike behind him Noda finally has something to put his name on even if he is forced out of office.
    "After he is forced out, well maybe the DPJ (Democratic Party of Japan) is torn apart, maybe it won't exist any more in the way we know it. But it's something that he probably doesn't really care all about much, because his mission as Prime Minister will be accomplished then," Nakano said.
    Opinion polls suggest the Democrats would suffer heavy losses in a snap election, but the rival Liberal Democratic Party would also come out well short of a majority although some potential voters do recognize the necessity of raising the tax rate.
    "Even if everyone doesn't actually talk about the fact that the tax needs to be raised, it's something that everyone does understand. So as one first step, raising it to 10%, I think that it can't be helped," said 72-year-old Toshihiko Urata.
    Others said that while they recognized why the government was trying to raise the tax rate, they still worried about how it may affect purchases.
    "For large purchases, such as a house or a car and such then I do indeed feel that sort of consumption may go down," said 39-year-old Yoshinobu Sekiyama.
    An inconclusive election could spell more uncertainty and political paralysis.
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