Opposition exacts concessions

DPJ yields on key goals for tax hike OK

Staff Report, Kyodo

The Democratic Party of Japan signaled Tuesday in last-minute talks with the two main opposition parties that it is willing to revise or shelve some of its earlier election pledges in return for their help to pass the contentious consumption tax increase.

The ruling DPJ is ready to compromise on its goals to consolidate kindergartens and nurseries into new day-care facilities, to create a basic pension system that guarantees monthly minimum benefits of ¥70,000 and to abolish a separate health insurance system for people aged 75 and older, if the Liberal Democratic Party and New Komeito back its push to double the consumption tax by 2015.

The child facilities, pension outlays and elderly health insurance were all key pledges the DPJ made in its successful campaign for the 2009 Lower House election, which saw it oust the long-ruling LDP camp.

The three parties also agreed to eventually come up with ways to ease the burden of low-income households when the 5 percent consumption tax is raised to 8 percent in 2014 and 10 percent in 2015 under the DPJ government-sponsored bill.

The DPJ, LDP and New Komeito deferred the specifics to a later date, however. They agreed to start talks on those details only after the tax reform bill is enacted, party sources said.

The DPJ-led coalition, which lacks a majority at the Upper House, is trying to win the opposition parties’ support to pass the tax hike by June 21, when the Diet session ends.

But even if the DPJ can win over the two opposition parties, it faces a huge internal rift, as key members, including kingpin Ichiro Ozawa and his followers, oppose the tax hike, which Ozawa as then party chief in the 2009 campaign vowed would not be pursued.

Prime Minister Yoshihiko Noda told the Lower House Budget Committee he will continue to try to turn around the tax hike foes within the DPJ.

“I will firmly consolidate the opinions within the party,” Noda said.

The DPJ has been holding trilateral and bilateral talks with the LDP and New Komeito to agree on changes to the tax bill.

A key issue in the cross-party talks has been on how to support low-income earners.

The DPJ originally proposed giving cash benefits to low wage earners when the tax is raised to 8 percent, and then to introduce a special system to combine tax breaks and cash benefits after the 10 percent rate kicks in.

The LDP and New Komeito are basically in agreement over the initial cash benefits, but the LDP is demanding that the government introduce a multiple tax-rate system that sets a lower levy on daily necessities like food and medicine to prevent overpayment and benefit fraud.