DPJ, LDP platforms test tax hike waters

Parties kick off unofficial campaigns for July 11 poll

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The ruling Democratic Party of Japan and the opposition camp unofficially began campaigning Thursday for the July 11 Upper House election, by releasing their platforms, and both sides seemed to be dancing around a tax hike.

In a precarious move, the DPJ decided to put priority on fiscal reform and economic recovery, but also announcing it will begin “nonpartisan negotiations on tax reforms, including a review of the consumption tax.”

“Talking about the consumption tax has long been considered taboo” in politics, Prime Minister Naoto Kan said. “But we decided to break the ice and write about it in our manifesto.”

Kan said he wants to put together a plan by March and secure a nonpartisan consensus. If a consensus can’t be reached, the DPJ will propose its own plan, he said.

To do this, the DPJ might study a plan proposed by the conservative Liberal Democratic Party, the main opposition force, to hike the consumption tax to 10 percent “as a reference,” he said.

The DPJ did not offer a time frame on raising the consumption tax, abiding by vows made by the administration of Yukio Hatoyama that Kan’s Cabinet replaced last week.

In the general election last summer, the DPJ promised to keep the sales tax at 5 percent for the duration of the Lower House’s term, although it later actively debated hiking it in the future.

Kan, who doubles as DPJ president, emphasized he will “quickly reach a conclusion” on the tax changes and hinted the party will likely shift its focus to debt control instead of stimulating public spending.

The DPJ platform says it will attempt to restore fiscal health and achieve a surplus in the primary balance in fiscal 2020. It also says it will begin formulating multiyear budgets in fiscal 2011 and draft a midterm fiscal framework, while keeping fresh bond issuances this year under the record-breaking ¥44 trillion issued in fiscal 2010.

On foreign policy, the DPJ said it will strengthen ties with the United States and pledged to follow through on the agreement to move U.S. Marine Corps Air Station Futenma elsewhere in Okinawa.

On ties with Asia, the party stuck with the previous administration’s vows to create an “East Asian community” with China and South Korea, but also said it would ask Beijing to show more transparency in its military spending.

Other highlights of the DPJ’s pledges include reducing the number of Upper House lawmakers by 40 from 242 at present, and reducing by 80 the number of Lower House lawmakers elected by proportional representation, which now stands at 180.

Among vows the DPJ revised is the monthly child allowance of ¥26,000 per child, which it is now apparently backing away from in favor of providing lower medical bills and other benefits.

A related revision will affect the child-allowance law hastily enacted in March by canceling payouts to children who reside outside Japan, the manifesto said.

The DPJ promised to keep working on pledges it failed to fulfill, including ending the provisional gas tax and making expressways toll-free. The free expressway deal was partially restrained by worries over its impact on the environment and other public transportation systems, it said. The provisional gas tax, it said, was upheld because of a sharp decline in tax income and lower gas prices.

The LDP’s manifesto focused on rebuilding the economy, differentiating itself from the DPJ by making specific numerical proposals — including doubling the consumption tax to 10 percent.

The LDP said it will aim for 4 percent growth in gross domestic product within the next three years and reducing the corporate tax rate from to 20 percent from 40 percent to give the nation an economic boost.

“We need to win the election in order to put the brakes on the DPJ administration,” said LDP chief Sadakazu Tanigaki, who has promised to resign if his party fails to stop the DPJ from winning a majority in the Upper House.

The LDP also showed its conservative colors by vowing to draft a new Constitution and revise Clause 2 of the war-renouncing Article 9 so Japan can create a “self-defense army.”

The LDP’s platform also went out of its way to oppose certain DPJ policies, including granting local-level suffrage to permanent foreign residents and allowing married couples to use separate surnames.