Japan’s LDP Agrees to Talks With Noda’s DPJ on Sales Tax

Japan’s main opposition Liberal Democratic Party agreed to talks with the ruling Democratic Party on Prime Minister Yoshihiko Noda’s bill to double the consumption tax in order to pay for soaring welfare costs.

LDP Secretary-General Nobuteru Ishihara announced the decision at a press conference today in Tokyo. His party has called for the DPJ to withdraw legislation to revise the social security system in return for support on the tax bill.

Noda this week acceded to opposition calls to replace two of his Cabinet ministers in order to win support for the legislation, which he says is necessary to address a declining birthrate and aging society. Failure to raise the five percent tax threatens to worsen the world’s largest debt, an issue Fitch Ratings cited last month in cutting Japan’s credit rating.

The public is increasingly at odds with Noda’s push to pass the legislation before parliament is scheduled to end on June 21. The number of voters opposed to the tax rose 5 percentage points to 56 percent this month from May, while those in favor fell 7 points to 32 percent, an Asahi newspaper poll yesterday showed. Almost three-fourths said there is no need to pass the bill during the current session.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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Japanese Prime Minister Yoshihiko Noda

Katsumi Kasahara/Pool via Bloomberg

Yoshihiko Noda, Japan's prime minister.

Yoshihiko Noda, Japan's prime minister. Photographer: Katsumi Kasahara/Pool via Bloomberg