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Abe won’t call for Lower House poll after delaying sales tax hike again

Kyodo

Prime Minister Shinzo Abe appears likely to forgo a House of Representatives election this summer over the planned postponement of a consumption tax increase from next year.

In a meeting on Monday with Abe, Finance Minister Taro Aso told the prime minister he will accept Abe’s plan to delay the tax hike by two and a half years from April 2017 and to hold a House of Councilors election alone this summer, according to sources.

Aso had opposed the postponement of the consumption tax hike and called for holding the general election and the Upper House election on the same day.

Speaking to reporters after meeting with Abe, Toshihiro Nikai, chairman of the General Council of Abe’s Liberal Democratic Party, also said, “I don’t think there should be (a simultaneous holding of Upper and Lower House elections), and I took it that the prime minister feels the same way.”

Abe’s inclination to avoid seeking voters’ full mandate over the envisioned postponement by dissolving the Lower House and calling a general election, despite his pledge to increase the tax next April, could spell trouble for his administration as the key Cabinet minister voices opposition to his leader’s decision.

Passing up a Lower House poll will mean only an Upper House election will be held this summer, most likely on July 10.

In the wake of Abe’s apparent policy shift on the tax issue, the Democratic Party and three other opposition parties decided Monday to submit a motion of no-confidence in his Cabinet on Tuesday, according to Social Democratic Party leader Tadatomo Yoshida.

Kazunori Yamai, acting chairman of the DP Diet Affairs Committee, criticized Abe’s move, saying, “If (Abe) says he will not be able to raise the tax while he is in office, it would be tantamount to declaring that his Abenomics (policy mix) has failed.”

Yamai was referring to the expiration in September 2018 of Abe’s term as president of the LDP.

While retaining his opposition to dissolving the Lower House, Natsuo Yamaguchi, leader of the LDP’s junior coalition partner Komeito, refrained from expressing an opinion on the envisaged tax hike postponement after discussing it with Abe Monday.

A decision on the tax hike delay “is not something I can reach by myself. We will come to a conclusion after consultation within the party,” Yamaguchi told reporters.

Earlier, a source said that despite the dissenting voices within his government and party, Abe told confidants that “even if only an Upper House election is held, we can get the public to accept our position as long as we explain it carefully.”

LDP policy chief Tomomi Inada said Monday she told Abe that if he were to further delay the tax hike, he “should seek voters’ verdict” by dissolving the Lower House for a general election.

Referring to Abe’s plan to delay the planned consumption tax hike by 2 percentage points to 10 percent for two and a half years, the LDP’s Nikai said he “fully support views by the prime minister.”

LDP Vice President Masahiko Komura told reporters separately that Abe “appears to have a firm will” about the tax issue.

Speaking at an LDP meeting Sunday in Toyama Prefecture, Aso, who doubles as the deputy prime minister, said the prime minister should call a Lower House election if he is to postpone the tax hike. “Unless a Lower House election is held to seek voters’ verdict, it would not make sense,” he said.

It would be the second consumption tax hike postponement under Abe following an increase of 3 points to 8 percent in April 2014.

The tax was to be raised by another 2 points to 10 percent in October 2015, but Abe said in November 2014 that the increase would be postponed until April 2017.

After announcing the first postponement, Abe dissolved the Lower House and called a general election, saying he needed to seek the people’s mandate on the decision. The governing coalition led by his LDP won the ensuing election in a landslide.

The likely further tax hike postponement comes at a time when the Japanese economy is experiencing sluggish growth amid tepid domestic consumption. Abe’s decision to hold off on the tax rate bump is likely informed by the fact that consumer spending plunged the last time the consumption tax was raised in April 2014.