Noda hints delay in deciding tax, welfare reform

Kyodo

Prime Minister Yoshihiko Noda indicated Tuesday that the government and the Democratic Party of Japan will postpone deciding on their social security and tax reform plan until next year, despite their initial yearend target, amid criticism about hurrying to raise the consumption tax.

“I instructed (ruling lawmakers) to reach a consensus within the party at first by the end of the year,” Noda said. “After that, we will seek to have a decision by the government and the ruling party ‘around’ the year’s end.”

Noda has said the government and party want to agree on a draft of the comprehensive reform plans, which are to address swelling welfare costs with tax changes, by the end of December before submitting the related bills to the Diet next year.

The reform plans, an outline of which was unveiled in June, would see the government double the consumption tax in stages to 10 percent by the mid-2010s. The draft plans are expected to specify such items as the timing and extent of the tax hikes.

There is opposition to Noda’s handling of the issue from within the DPJ, with some lawmakers threatening to leave the party if the tax is raised too quickly to carefully consider the possible adverse effects on the economy, which has been mired in chronic deflation. Yasunori Saito, elected from Miyagi Prefecture, said on his blog Tuesday that he will leave the party to protest Noda’s intention to raise the consumption tax and join the Trans-Pacific Partnership free-trade agreement, while Akira Uchiyama, from Chiba Prefecture, has also indicated he will quit the party due to the tax hike plans, DPJ sources said.