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Thursday, June 24, 2010

DECISION 2010

Parties focus on economy, taxes

Looking for pocketbook votes, emphasis is on growth, mending government finances


Staff writer

With the campaign officially kicking off for the July 11 Upper House election, political parties are weighing in on rebuilding the economy and government finances, hoping their platforms will translate into votes.

After a rocky nine months in power, the Democratic Party of Japan's campaign manifesto focuses on the economy as the priority, promising a halt to the stagnation that has "plagued the nation for the past 20 years," Prime Minister Naoto Kan said.

But it remains to be seen if the DPJ's apparent shift to a more pragmatic approach in tackling the economy will win voters over, or whether the opposition camp can present a viable alternative vision for leading the nation.

"The DPJ is now much more interested in macroeconomic policy than it was in the 2009 manifesto," said political commentator Tobias Harris.

The DPJ's platform for last year's Lower House election lacked a clear statement on how to get Japan growing again, Harris said, something the party acknowledged by issuing a "growth strategy" after it was criticized for lacking one.

"But this manifesto is a growth strategy — whether it is a good one is another question entirely. But consistent with Kan's policy address (in the Diet on June 11), the DPJ is intent on tackling sluggish growth, high deficits and deflation in the coming years," he said.

Pledging to create a "strong economy, strong government finances and strong social security," the DPJ platform says it will attempt to restore fiscal health and achieve a primary balance surplus in fiscal 2020.

It also says it will begin formulating multiyear budgets in fiscal 2011 and draft a midterm fiscal framework, while keeping fresh government bond issuance under the record-breaking ¥44 trillion of fiscal 2010.

And in the wake of Yukio Hatoyama and Ichiro Ozawa's resignations over their money scandals, the DPJ is also placing "clean" politics as one of its central topics.

Besides a ban on all corporate donations, the DPJ is also calling for reducing the number of Upper House lawmakers by 40 from the current 242 and taking away 80 proportional representation seats from the Lower House, leaving a total of 400 lawmakers in that chamber.

"On this score the threading of Kan's biography as a crusader for clean politics throughout his career is a good political move by the DPJ — running on Kan's biography distances the party from both Hatoyama and Ozawa and the (Liberal Democratic Party)," said Harris, who runs the political blog Observing Japan.

However, he acknowledges that the DPJ's biggest shift from last year's platform may be the weight assigned to foreign policy.

"Foreign policy was an afterthought in last year's manifesto. This year the party included a number of specific policy positions on a range of issues," he said.

On the controversial relocation of U.S. Marine Corps Air Station Futenma, the DPJ states it will follow through with the agreement to move the base to another part of Okinawa while also "working to alleviate the burden" on Okinawa residents.

And regarding relations in Asia, the DPJ vows to create an "East Asian community" with China and South Korea. The idea was first floated by Hatoyama last year when he was still fresh and popular after the DPJ ousted the LDP in the Lower House election.

"What this manifesto makes clear is that bilateral relationships with other democracies in Asia is a pillar of its own in Japan's foreign policy," Harris said.

The LDP's platform also focuses on rebuilding the economy. The top opposition party said it will aim for 4 percent growth in gross domestic product in the next three years and reduce the corporate tax to 20 percent from the current 40 percent to lift the economy.

The LDP vows to draft a new Constitution and revise Clause 2 of the war-renouncing Article 9 so Japan can create a "self-defense military."

While placing weight on the Japan-U.S. alliance, the party is saying it will promote a realignment of U.S. forces in Japan to alleviate the burden posed by bases in Okinawa and elsewhere.

The LDP's platform underscores its conservative elements, opposing some DPJ policies, including granting permanent foreign residents to right to vote at the local level and allowing married couples to use separate surnames.

Experts say, however, that despite the LDP's efforts to differentiate itself from the DPJ, the two party's policies are similar on many points.

"We shouldn't be all that surprised that the two parties resemble each other in terms of policy — it's pretty much standard in developed democracies for the leading parties to converge to the center," said Harris of Observing Japan.

Instead, it is looking increasingly likely that the consumption tax debate will be the center of focus and a major point of contention in the campaign.

The DPJ has said it wants to begin "nonpartisan negotiations on tax reform, including a review of the consumption tax," and Kan said the party might study the LDP's plan to raise it to 10 percent, "as a reference."

Hidekazu Kawai, an honorary professor at Gakushuin University, said this was a bold move by the ruling party, considering how talk of a tax hike has historically been damaging to political parties.

"The public is not confident that a tax hike would lead to better social security," Kawai said, adding this shows how the public in general doesn't trust the government.

Kawai pointed to recent opinion polls showing support for the DPJ suffering a mild setback and said this was a direct result of its decision to mention tax reform in its platform.

But with the ruling and main opposition parties all calling for a consumption tax hike, the public doesn't have much of a choice, he said.

The recently formed Tachiagare Nippon (Sunrise Party of Japan) and New Renaissance Party have also pledged to hike the consumption tax, while Your Party, led by former LDP member Yoshimi Watanabe and the third-most popular party in opinion polls, has promised to work on cutting waste before debating a tax hike.

Opposing an increase is DPJ coalition partner Kokumin Shinto (People's New Party), whose leader, Shizuka Kamei, has said he would consider pulling the party out of the coalition if the DPJ tries to raise the consumption tax.

The conservative-leaning party has made rolling back the postal privatization process its core policy, but Kamei resigned from the Cabinet when the Diet session wrapped up before a bill to this end was enacted. The DPJ has pledged to prioritize the bill during the next Diet session.

The Japanese Communist Party and Social Democratic Party have also voiced their opposition to a tax hike. The two have also called for kicking the Futenma air base out of Okinawa.

But Kawai said that despite the many parties that are vying for votes in this election, there doesn't appear to be a single force that stands out of the pack.

"Public approval for the DPJ, LDP and Your Party have all decreased in recent polls," indicating how the public is having difficulty finding a party of their choice, he said.



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