Members of the ruling Democratic Party of Japan’s tax panel on Wednesday authorized panel executives to negotiate with the government the timing of a consumption tax hike, paving the way for Prime Minister Naoto Kan’s tax reform plan to be approved as early as Thursday.
The proposal drafted by the DPJ panel, headed by Deputy Chief Cabinet Secretary Yoshito Sengoku, stipulates raising the sales tax to about 10 percent “by around the mid-2010s,” providing the economy improves, a more vague target than the government’s plan to hike the tax to 10 percent in stages “by 2015.”
The panel executives and the government were still negotiating the final wording.
“I think it’s time for us to clear a hurdle,” said Koichiro Genba, state minister of national policy who doubles as the DPJ’s policy chief, inviting panel members to entrust the executives to negotiate with the government.
Both the DPJ and the government had intended to finalize the tax reform plan by the end of June, but party lawmakers who attended the panel refused Monday to approve the government plan, saying a tax hike could worsen the economy.
During Wednesday’s meeting, many DPJ members again voiced such concerns, but Sengoku said the executive members would guarantee that “they would not allow a tax hike without actually seeing an improvement in the economy.”
A recovery will be evaluated based on an economic index, including both the nominal and real growth rates, the speed of recovery following the Great East Japan Earthquake, and the strength of the global economy.
Sakihito Ozawa, the panel’s No. 2, said he was glad the DPJ members had given the executives the authority to negotiate with the government.
Cabinet rating plunges
Public support for embattled Prime Minister Naoto Kan’s Cabinet fell sharply to 23.2 percent, a survey showed Wednesday, with 66.3 percent of respondents saying his decision to remain in office has created a political vacuum.
As to the timing of Kan’s exit, 30.5 percent said he should quit immediately, while 37.1 percent said he should resign when the current ordinary Diet session ends at the end of August.