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Double Japanese general election looks more realistic as unpopular tax hike approaches

by Sakura Murakami

Staff Writer

With an Upper House election in July and a tax hike planned for October, murmurs fueled by comments from top ruling party lawmakers that Prime Minister Shinzo Abe may call a snap Lower House general election this summer have been reverberating through the nation’s political and financial circles.

For the ruling coalition, a snap election would be a major political gamble because it would put its current supermajority of more than two-thirds in both chambers at risk.

But for Abe, the risk may be worth the potential reward because there may be no better time for him to call a general election than this summer, given an expected economic slowdown in the fall, Cabinet’s high approval ratings and a tight political schedule over the next two years, political observers say.

“With a tax raise in October, the economy might take a downturn, and with that the LDP may fall out of favor with the public,” said Hiroshi Miura, a political public relations strategist and president of campaign consultancy firm Ask Co.

Echoing many other observers, Miura pointed out that it would be difficult to dissolve the Lower House and launch a power struggle around the time of the Tokyo Olympics and Paralympics next year.

And after the Tokyo Games, Abe could become a lame-duck leader — his current and, according to party rules, final term as Liberal Democratic Party president is set to end in September 2021.

Given those risks and a narrow window of opportunity, Abe’s best bet to hedge losses may be by dissolving the Diet this summer, Miura explained.

Abe has twice postponed the second phase of the tax hike, from 8 to 10 percent, right before a major national election. Each time Abe’s coalition won a landslide victory, another reason that analysts believe he may do the same for a third time.

When asked at a news conference last week whether the submission of a no-confidence motion against Abe would be enough to trigger a snap Lower House election, Chief Cabinet Secretary Yoshihide Suga didn’t mince words.

“I would say of course that would be so,” he said, sparking a media frenzy over the fact that a high-ranking member of Cabinet touched on the possibility of a double election.

On Monday, LDP Secretary-General Toshihiro Nikai further fueled the rumors, telling a news conference that “he feels that there is some momentum” behind calling for a general election, while also claiming that “there is no reason” to call for a double election in the same breath.

Still, Miura believes a double election is a risky option for Abe in terms of revising the Constitution because it would threaten the ruling bloc’s supermajority. If Abe is really serious about revising the supreme law, it would be a safer bet for him to push for constitutional revision with the supermajority he already has, Miura said.

To initiate a constitutional referendum, a necessary step if Abe is to achieve his goal of revising the top law to formalize the legal status of the Self-Defense Forces, support from more than two-thirds of members in both chambers is needed.

However, opposition parties are currently unpopular among voters, meaning a snap election would likely favor the ruling bloc. Polls by public broadcaster NHK consistently show approval ratings of over 40 percent for the Abe administration, reaching as high as 48 percent this month. In contrast, the largest opposition party — the Constitutional Democratic Party of Japan — has languished at the 5 percent mark since the beginning of the year. The next largest opposition party, the Democratic Party for the People, has fared even worse, with approval ratings of just under 1 percent.

Lawmakers of the opposition parties have meanwhile been vocal about the need to join forces with one another in time for the Upper House elections, with CDP leader Yukio Edano saying in late April that the opposition needs to “strategically field candidates” so as to maximize the number of votes cast against the ruling bloc.

Yet despite the repeated calls for unity, a clear partnership between the opposition parties has yet to materialize with just under two months to go before the Upper House elections.

Some local media outlets have speculated whether Abe, as he did in the past, would try to justify a double election by claiming that the public needs to have a say on whether to postpone the tax hike scheduled for October.

The tax hike is indeed unpopular with the public, with polls conducted by the daily Asahi Shimbun in mid-May showing that some 54 percent of respondents were against it, with 39 percent for, suggesting that the public would likely welcome another deferral.

However, Abe might need to find some pretext to dissolve the chamber other than postponing the tax hike for a third time, according to experts on fiscal policy.

Postponing the tax hike this time is “technically difficult,” explained Takero Doi, a professor at Keio University who is well-versed in public finance and taxation.

“Note that a new law would have to be enacted to defer the tax hike. It would be difficult to draft a bill and rally support in the few months left before October,” Doi explained.

Doi also added that purchasing agreements for October onward are being signed under the premise that there will be a tax hike, and it would be difficult to overturn that under those time constraints.

“A double election is possible, but the justification for that most probably won’t be the deferral of the tax hike,” he added.

This time around the tax hike is scheduled to be introduced in the middle of the fiscal year, and the added tax revenue totaling some ¥1.4 trillion that would come in over the six months from October through to March 2020 has already been included in the annual budget and approved by the Diet, adding to the difficulty of any postponement.

The government has consistently claimed that nothing short of a financial calamity as devastating as the 2008 global financial crisis, triggered by the collapse of U.S. investment bank Lehman Brothers, would justify postponing the tax hike yet again.

So with no tangible reason to postpone the tax rise as of yet, Abe does not have a clear policy for the public to vote on that can justify the dissolution of the Diet, political observers say.

Still, Abe can come up with “plenty of reasons” to call for a double election, Miura said. And with the timing of a vote unlikely to be on his side in the near future, that may be the prime minister’s best bet.