Tokyo’s Move to Raise Tax Hits Snag
Japanese Prime Minister Yoshihiko Noda’s plan to double the sales tax by the middle of the decade suffered another setback on Tuesday as lawmakers bolted from his ruling party in protest over the proposed rate increase to 10%.
In addition to opposition from lawmakers, sliding public support is making it difficult for Mr. Noda to push ahead with the plan, seen as politically precarious but badly needed. The increased revenue is sought to address Japan’s debt load, the largest among the world’s rich nations, at more than twice economic output.
“I am taking action, I will be leaving the Democratic Party of Japan,” Yasunori Saito wrote on his Twitter account, referring to the ruling party. “No tax hike until we get out of deflation,” he added.
One DPJ lawmaker had said over the weekend that he would leave the party, while another resigned from a senior party post.
Japanese media reports said others may follow suit and leave the party.
The lawmakers have been emboldened by recent opinion polls showing voters are increasingly opposed to the sales-tax increase and disgruntled with Mr. Noda’s failure to stick to pledges to cut wasteful spending.
A survey by the Nikkei business daily published Monday showed that 53% of respondents disapproved of the plan to double the sales tax by mid-decade, while 38% supported it. The poll by the financial daily also showed that 36% of respondents support the Noda cabinet, while 53% give it the thumbs down.
Mr. Noda’s DPJ, which came to power in the summer of 2009, has so far failed to meet many of its promises to slash unnecessary spending, such as cutting the number of lawmakers and the wages of government officials.
Last week Mr. Noda’s cabinet approved funding for the resumption of a dam project that had come to symbolize unwanted public works and that the DPJ had initially put on hold.
“The dam construction is the worst among the broken promises,” lawmaker Mr. Saito wrote.
In the face of mounting opposition, officials hinted that Mr. Noda may not be able to meet a year-end deadline to finalize the road map intended to spell out when and how the 5% tax will be raised, before being increased to 10% by around 2015.
Mr. Noda on Tuesday instructed the DPJ to come up with its draft by the end of the year, while he said the government also should “aim to” compile the final road map by year end.
Asked whether the expression meant the government could postpone the decision into January, Mr. Noda’s top aide, Chief Cabinet Secretary Osamu Fujimura, said it could be interpreted many ways, adding that he didn’t expect it to be well into January.
