DPJ Frays Over Japan Sales Tax Legislation as Voting Looms

Japanese Prime Minister Yoshihiko Noda
Yoshihiko Noda, Japan's prime minister. Photographer: Haruyoshi Yamaguchi/Bloomberg

Prime Minister Yoshihiko Noda’s Democratic Party of Japan struggled to overcome internal resistance to his bill to double the consumption tax ahead of a lower house vote that may come as soon as tomorrow.

Former DPJ leader Ichiro Ozawa said he will vote against the bill to raise the five percent tax, risking possible expulsion from the party. As head of the party’s largest faction, Ozawa could take dozens of legislators with him.

“I have no concrete plans to leave and form a new party,” Ozawa told reporters in Tokyo, in remarks carried on NHK Television. “After the vote, I will consult with my group and want to select the best possible path.”

The DPJ reached a deal last week with the main opposition Liberal Democratic Party and a smaller group to double the tax by 2015, a move Noda says is necessary to control record debt and ballooning welfare costs. Should more than 50 Democrats vote against the bill and be expelled, the ruling party could lose its majority in the lower house.

While LDP official Nobuteru Ishihara told reporters that the parties agreed to aim for a lower house vote tomorrow, DPJ legislator Koichi Takemasa later said a vote is unlikely until June 26 at the earliest.

Parliament voted this afternoon to extend the current session, scheduled to end today, until Sept. 8.

The bill would raise the tax to 8 percent in April 2014 and to 10 percent in October 2015. The DPJ needs the cooperation of the LDP to get legislation through the opposition-controlled upper house.

Political Career

Noda, who has vowed to stake his political career on the legislation, shelved many of his party’s pledges on social security to gain opposition backing. Opponents of the plan, which is unpopular with the public, say it is a breach of the platform on which the Democrats swept to power in 2009, and could fail in its aim of boosting tax revenue if it discourages consumption.

“Now is not the time to raise the sales tax. The Japanese people do not want this,” DPJ lawmaker Hirosato Nakatsugawa told a party gathering yesterday after Noda called for unity.

A poll published in the Asahi newspaper on June 6 showed 56 percent of respondents opposed the sales tax bill, up from 51 percent a month earlier.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE