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Wednesday, March 26, 2008

DPJ to block gas tax bill; pump price looks to fall

Staff writer

Car owners can expect a break at the pump in the near future if the Democratic Party of Japan makes good on its threat to block a government-backed bill to extend higher rates on road-related taxes that expire March 31.

Both the Liberal Democratic Party-New Komeito ruling coalition and the government have been desperately looking for ways to keep in place the special tax rates, revenues from which are used exclusively to fund road construction.

The ruling bloc and the DPJ-led opposition camp, however, failed to come to an agreement on the tax reform bill Tuesday afternoon in the opposition-controlled Upper House. The bill includes a clause to extend the provisional auto-related tax rates for another 10 years.

If abolished, as the DPJ has been calling for, gasoline prices would fall by ¥25 per liter.

In late February, the ruling bloc rammed the tax reform bill through the Lower House, where it holds a comfortable majority. Angry opposition parties, in return, have left the bill untouched in the Upper House for weeks.

Chief Cabinet Secretary Nobutaka Machimura urged the opposition lawmakers to "fulfill their obligations as Diet members to deliberate on bills submitted to the Diet regardless of their opinions."

"(I) think the Diet is nearly on the verge of collapse," Machimura said during a news conference.

At the urging of Lower House Speaker Yohei Kono, the Diet affairs chiefs of the ruling and opposition parties met Tuesday afternoon and agreed to hold talks on the tax bill. But a detailed agenda for the talks has yet to be agreed on, and a senior member of the ruling bloc said it may be difficult to come to a conclusion before March 31.

Earlier Tuesday, Susumu Yanase, DPJ Diet affairs chief of the Upper House caucus, told the party's executive meeting that the upper chamber will not begin deliberations on the bill before the end, next Monday, of the current fiscal year unless the situation changes.

If the bill is either rejected or not voted on in the Upper House within 60 days after it was handed to the chamber, the Constitution stipulates that it can be approved with a two-thirds majority in the Lower House, which the ruling bloc currently controls. In this case, the tax reform bill would be sent back to the lower chamber on April 29 for a second vote.

But without approval before March 31, the extra tax rates will be terminated and gasoline prices would temporarily fall — only to be hiked back up after the ruling bloc pushes the tax bill through the Diet one month later.

Speaking on condition of anonymity, an executive member of the ruling bloc said that if the DPJ continues its hardline stance, "there is no alternative but" for gasoline prices to fluctuate.

To avoid "causing confusion in the lives of the public," the DPJ has offered a counterproposal to delink the road taxes from other special rates, such as on imported cigarettes and whiskey, for a vote before they expire March 31.

"If the ruling bloc could agree to our proposal, no unnecessary confusion will result," DPJ leader Ichiro Ozawa told a news conference Tuesday.

Ozawa went on to say that the government and the ruling bloc "need to realize that they only have had control over one of the houses (of the Diet) since last July," when the DPJ saw a landslide victory in the Upper House election.

The higher tax rates were adopted as a provisional measure in the 1970s to finance road construction nationwide. Without the added rates, the government argues that the state and local governments will suffer a ¥2.6 trillion revenue shortfall.

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The Japan Times

Article 1 of 6 in Business news


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