Noda fails to win over Ozawa on tax hike

by and

Staff Writers

Prime Minister Yoshihiko Noda, head of the ruling Democratic Party of Japan, failed Wednesday during a meeting lasting 90 minutes to persuade former DPJ leader Ichiro Ozawa to back the administration’s tax hike proposal.

Noda wanted Ozawa, whose group is the biggest in the DPJ, to support the increase so it can make it through the Diet this legislative session, which is currently scheduled to end June 21.

Ozawa refused to budge.

“There are things that need to be taken care of before the government asks the public to shoulder the burden of a tax hike,” Ozawa said after the meeting, telling reporters that his conversation with the prime minister didn’t change his stance.

Noda wants to double the consumption tax to 10 percent by 2015 to cover swelling social security expenses.

Ozawa and his some 120 allies are against the hike because the DPJ promised in 2009, while campaigning before coming to power, not to increase the sales tax until the terms of the current Lower House members end in 2013.

“I can’t support the bill” since raising the tax could hurt the already frail economy, Ozawa added.

Noda meanwhile stressed he and Ozawa were on the same page and agreed that a tax hike is inevitable, but they could not reach an agreement over when it should take place.

“My belief is that (a tax raise) can’t be postponed,” while Ozawa insisted governments reform and economic stimulus should precede a tax hike, Noda told reporters.

DPJ Secretary General Azuma Koshiishi, an Ozawa ally trying to hold the fractious party together, also attended the talks at the party’s headquarters.

The veteran lawmaker said Ozawa could meet with Noda again to seek common ground.

“It was a good meeting,” Koshiishi told reporters, adding it was the “first step” for the two sides to come together over the issue.

Regardless of whether Noda can gain Ozawa’s support, he still has to seek cooperation from the largest opposition force, the Liberal Democratic Party, to get the tax hike through the divided Diet.

On Sunday, LDP leader Sadakazu Tanigaki hinted the LDP may cooperate if Noda doesn’t give in to Ozawa. Tanigaki wants Noda to promise to dissolve the Lower House as a condition for the LDP’s support for the tax increase.

Koshiishi, however, revealed that dissolving the Lower House was not discussed in the Noda-Ozawa meeting.

Meanwhile, the LDP faces its own internal scuffle. Although Tanigaki would like to pressure Noda into dissolving the Diet, some LDP members are willing to cooperate with the ruling party and pursue a quick tax hike.

“Instead of requesting a snap election, we should push for a tax hike. There is no need to rush into dissolving the Lower House,” Makoto Koga, a former secretary general of the LDP, said on TV last week.

Koga and other LDP veterans who support a tax hike say it is wishful thinking to believe the DPJ will dissolve the Lower House at this time.

Instead they have begun pressuring Tanigaki to collaborate with the DPJ on the tax hike and prepare for a election encompassing both Diet chambers in 2013.

Ozawa is considered influential because his group is the largest in the ruling party, but in early May prosecutors appealed a lower court ruling acquitting him of conspiring with aides to falsify financial reports for his political fund management body in 2004 and 2005.