Prime Minister Yoshihiko Noda has stated he would stake his political life on realizing integrated reform of the tax and social security systems. Japan's financial structure is worse than those of other advanced countries and even that of Greece, which was responsible for the euro crisis. Therefore it is in dire need of reform.
Although the share of foreigner-held Japanese government bonds has long stayed relatively stable at about 5 percent, it is now on an upward trend. It is feared that should the Noda Cabinet fail to accomplish its proposed reform due to objections from inside and outside the ruling party, speculative investors may trigger a "sell-off" rush, causing the national bonds market to tumble.
The ruling Democratic Party of Japan has decided that the consumption tax rate, now 5 percent, should be raised to 8 percent in April 2014, and to 10 percent in October 2015. It plans to submit related bills in the current Diet session. But the DPJ move will probably cause a fierce parliamentary confrontation between the ruling and opposition parties. Should Diet business bog down and lead to dissolution of the Lower House, the nation's political situation might drift into an unpredictably serious outcome.