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Saturday, March 29, 2008

Under fire, ruling bloc passes the '08 budget

Staff writer

Ignoring a rejection by the opposition-controlled House of Councilors, the Diet Friday evening passed an ¥83 trillion state budget for fiscal 2008, which starts Tuesday.

Meanwhile, six parties, from both the ruling and opposition camps, reached an agreement the same day on a "stopgap" bill to extend for two months until the end of May the special tax rates on seven categories of items that will increase in price when the current law expires, excluding extra road-related and gasoline levies.

"The public has high expectations (for the Democratic Party of Japan to) abolish the provisional (road-related) tax rates," DPJ Secretary General Yukio Hatoyama said Friday evening after the budget was enacted.

"To this day, we have continued to hold our ground and fight (for the abolition). And we are finally about to witness the result (of our efforts)."

Because the DPJ-led opposition camp-controlled Upper House has not voted to continue the gas tax rate, gas prices may go down in April. But they could be raised again anytime after April 29 by the ruling bloc, which has overriding power in the Lower House.

Article 59 of the Constitution stipulates that a bill can be sent back to the Lower House 60 days after it has been handed over to the Upper House for deliberation because it will be considered a "rejection" of the upper chamber — and be approved with a two-thirds vote, which the ruling bloc holds.

But the ruling bloc has not yet clarified if and when the Lower House would vote on the bill for the second time. It passed it for the first time on Feb. 29.

Nevertheless, political deadlock caused by a divided Diet may prevent the enactment by Monday of budget-related bills necessary to implement the 2008 budget, including a key tax reform bill.

"Instead of turning to the easy way out by increasing taxes and burdening the public, (the government) needs to secure revenue by (considering) how to achieve a primary balance, fully eradicate wasteful spending of tax money and thoroughly change the political structure," DPJ lawmaker Yukishige Okubo said during Friday's budget committee meeting in the upper chamber.

The Upper House rejected the government's fiscal 2008 budget proposal Friday afternoon. But the Lower House passed it later in the day.

Under Article 60 of the Constitution, Lower House approval is the deciding factor and thus the budget was enacted.

Since the Liberal Democratic Party-New Komeito ruling bloc rammed the 2008 budget and related bills through the Lower House on Feb. 29, they have been locked in a political battle with the opposition over provisional tax rates on gasoline and other auto-related taxes.

The special tax rates — imposed in the 1970s but in place ever since — are solely used to fund road construction.

The government's tax reform bill includes a clause maintaining the special rates for another 10 years. The DPJ, however, wants them scrapped, which would drop gas prices by ¥25 per liter.

"To be honest, I am appalled (at the government) for promoting policies to extend the provisionally added tax rates for another 10 years," Okubo said. "At a time when pressing issues like social security, the environment and education are piling up, why are road accounts so special?"

Although gasoline prices will likely go down, other items, including imported whiskey and cigarettes, will get more expensive if the special tax rates are abolished.

"The stopgap bill is based on a realistic decision aimed at avoiding confusion in people's lives and in the business community," Chief Cabinet Secretary Nobutaka Machimura said Friday morning. "Since the DPJ was only focused on (lowering prices of) gasoline, we had the responsibility as the government to come up with a realistic measure."

Looking to bolster his Cabinet's sagging support rate and to break the political deadlock, Prime Minister Yasuo Fukuda declared at a news conference Thursday afternoon that the revenue from road-related taxes could be used for purposes other than road construction starting in fiscal 2009.

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The Japan Times

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