Cabinet OKs bill to double sales tax by ’15

Junior coalition partner is on verge of collapse due to internal conflict

by Masami Ito

Staff Writer

Prime Minister Yoshihiko Noda and his ruling Democratic Party of Japan-led government managed to submit the contentious bill to the Diet on Friday to double the consumption tax to 10 percent by 2015, while junior coalition partner Kokumin Shinto (People’s New Party) was on the verge of collapsing over internal conflict on the legislation.

Given the green light by the Cabinet in the morning and submitted to the Diet later in the day, the bill is now ready to be deliberated on in the Lower House and the government is hoping it will be passed by the time the current Diet session ends in June.

But, as usual, there was no smooth sailing in the political world of Nagata-cho.

The Liberal Democratic Party, the largest opposition force, is demanding that Noda dissolve the Lower House and call an election first, and some members of the DPJ, including kingpin Ichiro Ozawa and his allies, are firmly against the tax hike. A few of the Ozawa clan who have been given positions in the government or in the DPJ leadership are considering submitting their resignations as a show of rebellion.

But for now, the eight-member Kokumin Shinto is completely split in two, as leader Shizuka Kamei declared the end of the coalition, while the majority, including Shozaburo Jimi, state minister in charge of financial and postal issues, insist they are still a part of the alliance.

During a news conference Friday morning, Chief Cabinet Secretary Osamu Fujimura also stressed that the coalition is still intact.

“Forming a ruling coalition is an agreement between political parties — and whatever the party decides is the only” decision, Fujimura said, explaining that party members held an internal meeting Thursday evening and six lawmakers decided to remain in the alliance. “We don’t think there has been any change to the coalition.”

On Friday morning, Noda met with Kamei and asked him to change his mind, to no avail.

“The Kokumin Shinto lawmakers know what to do, that the coalition is over,” Kamei told reporters after the meeting.

Meanwhile, Jimi, along with other Cabinet ministers, approved the bill Friday, stressing he will not leave his party or the coalition.

“We are Kokumin Shinto and I have no intention of leaving,” Jimi told reporters Friday morning. “I officially signed (the approval of the bill) as the deputy leader of the party as well as a Cabinet minister of the Noda administration.”

The bill stipulates that the consumption tax will be raised to 8 percent in April 2014, and to 10 percent in October 2015 to cover snowballing social security payments.

Amid strong criticism from within the DPJ, the government and party leadership made various amendments, including specifying that the government will aim to achieve a nominal economic growth of 3 percent and a real growth rate of 2 percent. It also scrapped a clause to further raise the sales levy after the 10 percent hike.

“The tax and social security system reform is an urgent matter, considering various situations, including the rapidly aging society and low birthrate, the change in social and economic environment, the global market trend, including the EU financial crisis,” Fujimura said. The submission of the bill “is very meaningful.”

Kamei, however, is arguing that when Kokumin Shinto decided to form a coalition with the DPJ in 2009, they agreed that they would not raise the consumption tax. Jimi also urged Kamei to reconsider.