Controversial tax bill slides through Diet

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Japan’s Prime Minister scored a major victory with the Upper House of the Diet’s passage of his tax reform and social security tax bills that will double the nation’s sales tax to 10% in the next three years.

Yoshihiko Noda had bet his political career on the bills passage, and they were passed only 24 hours after the Prime Minister had survived a non-confidence vote in the Diet after promising to dissolve the Lower House for snap elections “soon”. With the bills’ passage, politicians are now looking to Noda to fulfill promises to call elections. Noda’s already persuaded the Liberal Democratic Party President, Sadakazu Tanigaki, to drop his threats. The DPJ voted against the no-confidence action, while the LDP and New Komeito avoided votes, essentially abstaining.

Noda was soft in victory, glossing over questions about what “soon” meant. “It’s not appropriate at this stage to clearly give a date,” was all he would say. The LDP says Noda should set the election before the current Diet session ends September 8th. Noda still wants to see some adjustments in voting disparities in Lower House elections first. The Prime Minister also still wants to pass a special deficit-covering bonds bill in the Diet, where parties are split. So far, the LDP and New Komeito have signaled they’ll not back Noda’s plan.

The Prime Minister’s next concern is someone wanting his job and willing to challenge for it. The DPJ says it will hold its presidential poll September 221st, and former farm minister Masahiko Yamada is saying he will nominate an ally as a candidate for the presidency, noting he “wants to change the DPJ”. Yamada has voted against reform bills in the Lower House last month.

Regardless of the political, even the Welfare Ministry says the consumption tax must be boosted to 17.1%, and not merely 10%, if public pension reforms, and pension payouts to raise benefits for low-income families are implemented. Some financial specialists say the need with be far greater, perhaps crating a need for a 20~25% tax increase.