In Monday's kickoff of political reform talks, the opposition slammed the ruling Liberal Democratic Party's position of maintaining corporate and group donations with greater transparency, though opposition parties were divided over whether to restrict or ban such contributions.

It cast uncertainty over Prime Minister Shigeru Ishiba’s hopes of reaching a consensus within the month to rehabilitate the LDP’s scandal-tainted reputation ahead of Upper House elections this summer.

The LDP, by far the largest recipient of corporate and group donations — it raked in approximately ¥2.3 billion ($15.6 million) last year, or 10% of its income — has advocated for “transparency over prohibition.”

At the Lower House’s Special Committee on Political Reform, the LDP proposed that the internal affairs minister discloses each political party’s total income from corporate and group donations each year, along with the names of donors and any amount contributed exceeding ¥10 million, as outlined in a bill submitted in January.

“The LDP doesn’t think of individual donations as good and corporate and group donations as bad. What is important is the balance between political party grants, individual donations, and corporate and group donations,” said former Environment Minister Shinjiro Koizumi.

The LDP's junior coalition partner, Komeito, and the opposition Democratic Party for the People (DPP), both reluctant to impose a complete ban, have together proposed to lower the cap on donations and install a third-party auditor in parliament to monitor the use of political funds.

Short of supporting a ban as preferred by other opposition parties, Komeito, instead of backing the LDP’s bill, proposed lowering the limit on donations, which is currently between ¥7.5 million and ¥100 million in a single year, depending on a firm’s capital stock and the number of employees.

A ban would encourage corporate and group donors to falsely donate as individuals, “creating a greater risk to transparency,” said Komeito lawmaker Yasuhiro Nakagawa.

Sharing similar concerns, the DPP proposed lowering the donation cap and narrowing the criteria for political parties eligible to accept donations.

DPP lawmaker Motohisa Furukawa said that a ban would exacerbate the decline in transparency because “it is realistically impossible to completely rule out the chance that donations are actually from corporations or organizations. They could be from corporations or organizations but just appear on paper as being from individual donors."

Meanwhile, other opposition parties are moving closer to proposing a ban on corporate and group donations, though excluding political groups.

The main opposition Constitutional Democratic Party of Japan proposes lowering the cap of donations from political groups from the current ¥50 million to ¥30 million.

“There is concern that we are leaving a loophole for political groups, which is completely false,” said Hiroshi Ogushi, a CDP lawmaker. “Banning political groups altogether would excessively restrict the freedom of political activity guaranteed by the Constitution.”

Nippon Ishin no Kai, which initially criticized the CDP proposal for creating the loophole, is not backing the latter's bill.

But in the course of drafting its own bill, Nippon Ishin reportedly decided to introduce the same exception after the Lower House’s Legislative Bureau reportedly said a full-fledged ban may violate the constitutional right to political freedom. Nippon Ishin is considering to propose an even lower cap of ¥10 million for donations from political groups.

Political funds reports show labor unions’ political groups donated ¥300 million in total to DPP and CDP lawmakers in 2023.

The LDP, CDP and Nippon Ishin will each present their proposed bills on corporate and group donations to the committee on Wednesday. Deliberations on the bills will commence on Friday.