Prime Minister Yoshihiko Noda said Saturday that his government "cannot sidestep" a controversial tax hike that has turned into the leader's highest priority and largest potential stumbling block.
During a 30-minute group interview with 19 members of the international news media, Noda appealed for opposition cooperation on his tax plan, which would help the country pay for its escalating social security costs and ease global concerns about its massive debt.
"There is no waiting in responding to this question" of how to create a sustainable social security system, Noda said. "We're faced with an aging society and a declining birthrate unprecedented in the history of humankind and we cannot sidestep this challenge. I believe all the political parties fully understand this."
Noda has staked his 6-month-old administration on the tax hike, and he faces a deadline later this month to submit the bill, which would double Japan's 5 percent consumption tax rate by 2015.
Noda's hope for political cooperation runs counter to recent history, and he faces a critical test in the next weeks to rally support for a bill that many in his own party oppose. The leading opposition party, meanwhile, provides an even trickier obstacle: Although its members support the tax hike in theory — the Liberal Democratic Party recommends the raise and was the first to propose it — they also sense an opportunity to obstruct the bill, lower Noda's approval rating and force a snap election.
But Noda said Saturday that talks with the opposition party were "beginning to jibe," and he discounted the idea of dissolving the Lower House — which his own party, the Democratic Party of Japan, controls — any time soon. According to reports in the vernacular news media, Noda last week held a private meeting with LDP President Sadakazu Tanigaki, their first one-on-one sit-down since Noda took office.
Because the LDP controls the Upper House, Noda, a fiscal hawk and former finance minister, will need cooperation from the opposition to pass the tax hike. Some political analysts in Tokyo think the LDP will agree to approve the consumption tax increase only if Noda promises to dissolve the Lower House immediately thereafter. That would set off an election among equally unpopular groups; according to a mid-February poll conducted by the Yomiuri newspaper, 16 percent support the DPJ and 17 percent support the LDP. More than 50 percent support no party.
Japan's consumption tax rate is the lowest among members of the Organization for Economic Cooperation and Development, and the government hasn't raised it since 1997. Since then, however, Japan has depended more on selling bonds than taxes to fund its budgets.
The government also faces a major demographic challenge, with a booming elderly population and a thinning workforce to support it. By 2055, according to government data, 40 percent of the population will be 65 or older. Just 8 percent will be younger than 15.
Opponents of the tax increase say the hike would further undermine an economy that has been stagnant for two decades.
Noda's push for the increase comes at a time when the government is trying to regain support following its much-criticized response to last year's natural and nuclear disasters. Noda on Saturday acknowledged that criticism, but he also highlighted the steps that his government has taken to help the recovery in the disaster-hit northeast. That includes the passage of four extra budgets and the allocation of ¥1 trillion to pay for cleanup in areas contaminated by radiation from the Fukushima No. 1 power plant.
Tsunami-battered areas farther away from the plant, Noda said, "have recovered predisaster daily life."
"Unfortunately there is criticism that what we've done has been inadequate — that we've been slow," Noda said. "And we have to be receptive to such criticism."
Nuclear security summit
KyodoPrime Minister Yoshihiko Noda on Saturday said he hopes to attend an international nuclear security summit in Seoul on March 26 and 27.
"I hope to attend it as Japan needs to tell the world the lessons, knowledge and reflections learned from the nuclear crisis at the Fukushima No. 1 power plant," Noda said during an interview with foreign media.
Noda also said he hopes to attend a trilateral summit meeting of Japan, China and South Korea in May in Beijing.
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