LDP panel dilutes tax hike proposal as peers rebel against setting a date

by Kazuaki Nagata

A key Liberal Democratic Party panel barely managed to contain a rebellion Thursday as debate on a proposal to schedule a consumption tax hike forced it to toss in vague wording that provides more wiggle room in picking a date for the increase.

Prime Minister Taro Aso originally wanted the government-sponsored bill to state the tax would be raised in fiscal 2011, if the economy had recovered by that time.

But fierce opposition softened the bill’s wording to state that the government will “implement necessary measures” to enact related bills for the hike by fiscal 2011 and aim to rise the tax “by the mid-2010s.”

“It’s not a bill for raising the tax. I won’t firmly oppose the bill,” said former LDP Secretary General Hidenao Nakagawa, who had hinted he might rebel against the ruling party’s top executives over the issue.

LDP members opposed to clarifying the timing claimed the softened wording shows the issue has not been resolved and another round of talks is on the way.

“I understand that the direction (in which this is headed) is that when the tax is really raised, it will be done with another bill,” said Upper House LDP member Ichita Yamamoto, who strongly opposes raising the tax in fiscal 2011.

Although it is theoretically possible to raise the tax in 2011, the newly diluted bill is still the way to go for right now, Yamamoto said.