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Friday, Oct. 21, 2011

Budget, tax-hike bills facing less resistance

Fearing public backlash, opposition to OK postdisaster funds legislation

Staff writer

Prime Minister Yoshihiko Noda will face his first major political test in the extraordinary Diet session that started Thursday, as his administration will attempt to pass a ¥12.1 trillion third extra budget for fiscal 2011 and tax hike bills worth ¥11.2 trillion through the divided Diet.

News photo
On the same page: New Komeito chief Natsuo Yamaguchi (below) has said he will back the third extra budget and tax hike bills submitted by Prime Minister Yoshihiko Noda's Cabinet in the extraordinary Diet session that started Thursday. KYODO PHOTO
News photo

The task proved too much for his predecessor, Naoto Kan, who was forced to step down. Raising taxes has always been a daunting and delicate matter for any government, but the opposition's control of the Upper House, which allows it to block government-sponsored bills, further complicates the situation.

But given Noda's continuing high public support rate and the fact that the third supplementary budget and new tax revenues would finance reconstruction work in the devastated Tohoku region, analysts believe the bills may face less resistance from opposition parties during the 51-day Diet session.

About ¥9 trillion of the third extra budget would be used for measures to rebuild the shattered economies of disaster-hit areas in the northeast, while the tax bills would raise ¥9.2 trillion over 10 years, also for rebuilding efforts in Tohoku.

Given the intended purpose of the extra funding, opposition lawmakers will find themselves in a delicate position if they work against the bills, according to analysts.

"It's less likely that Noda's administration will face stiff resistance from the opposition (compared with Kan's administration) unless there is a serious political scandal or slip of the tongue," said Tomoaki Iwai, a political science professor at Nihon University. "The opposition has already decided to cooperate (with the ruling Democratic Party of Japan) over Tohoku's reconstruction."

The Liberal Democratic Party will support the budget, LDP Secretary General Nobuteru Ishihara said Tuesday, but added the largest opposition party remains opposed to its related bills.

"There are some problems, and we will discuss them during (the upcoming) Diet deliberations," he said.

New Komeito, the second-largest opposition force, will also "cooperate (with the DPJ) to enact the budget as soon as possible (as our) requests have been included in the budget," its leader, Natsuo Yamaguchi, said Tuesday.

Noda's Cabinet will submit the third extra budget Oct. 28 and the prime minister will deliver a policy speech the same day. Question-and-answer sessions will take place Oct. 30 and Nov. 1, followed by deliberations, and the bills could be passed as early as mid-November.

The bills to hike taxes will mainly target corporate and income tax rates. The government also plans to issue special government bonds to finance postdisaster reconstruction measures, including decontamination in areas affected by radioactive materials emitted by the crippled Fukushima No. 1 nuclear plant.

The DPJ started making efforts to win New Komeito's backing on the budget and tax legislation before the Diet session began, for example by considering the opposition party's proposal to set the redemption period for the special bonds at between 10 and 20 years. The LDP has argued the period should be fixed at around 60 years.

On Friday, the DPJ-led government also decided to accept a New Komeito proposal to add ¥136 billion to the third extra budget to renovate public school buildings and make them more quake-resistant.

"Unlike the LDP, which has called for a snap election, New Komeito is likely to cooperate with the DPJ if the Cabinet can maintain its current support rate" among voters, said Koichi Nakano, a political science professor at Sophia University.

According to a Kyodo News poll conducted Oct. 1 and 2, the support rate for Noda's Cabinet stands at 54.6 percent, down from its high of 62.8 percent on Sept. 2, immediately after it was formed.

"If the rating starts to drop sharply, opposition parties will take advantage of the situation and start to attack Noda because once it starts to drop, it normally keeps on declining," Nakano said.

New Komeito chief Yamaguchi said Monday the party's members should be prepared for a snap election as the DPJ keeps flip-flopping on various key policies, but Nakano said the party is unlikely to push for such a poll at the moment.

Nihon University's Iwai echoed a similar view, saying: "New Komeito doesn't want a snap election now. In addition, their policies are close to the DPJ's, so Noda obviously wants New Komeito's support."

On some issues, Noda could face stronger resistance from DPJ ranks than from the opposition camp.

A decision on whether to join negotiations on the Trans-Pacific Partnership free-trade pact is one issue that threatens to shatter the DPJ's recent unity.

While the prime minister wants to reach a conclusion on the TPP before November's Asia-Pacific Economic Cooperation forum summit in Honolulu, DPJ lawmakers opposed to joining the TPP on Friday expressed their anger over the way the party is rushing to make a decision at a meeting of the DPJ's project team on economic cooperation.

The TPP is a controversial issue that finds favor with the nation's major industries but has also sparked strong opposition, especially from farmers and others in the agricultural sector who fear the pact — which seeks to remove all tariffs among member states in 10 years, including those on rice — would severely affect the already struggling industry.

Experts say the issue may damage the fragile unity within the DPJ, which was split between supporters of indicted kingpin Ichiro Ozawa and Kan's camp, even though Noda appointed some Ozawa loyalists as ministers and party executives in a bid to reconcile the warring factions.

"It might be difficult for Noda to maintain party unity" if the conflict between pro- and anti-TPP lawmakers escalates, Sophia University's Nakano said.

But the LDP is also being hampered by an internal power struggle among some of its executives, which might make it difficult for the party to unite against the DPJ and take advantage of any splits in the ruling party.

The LDP's internal strife deepened in late September, when three veteran lawmakers who head LDP factions fiercely resisted the proposed appointment of Kenji Kosaka as secretary general of the party's Upper House caucus. Kosaka was backed by Hirofumi Nakasone, the chief of the LDP's caucus in the House of Councilors who is supported by younger Diet members.

In the end, Kensei Mizote, who was backed by one of the veterans, was tapped to fill the position.

Meanwhile, the party has apparently eased on its push for the DPJ to call an immediate election, in order to avoid public criticism that it is not fully committed to postdisaster reconstruction.

LDP President Sadakazu Tanigaki said last month the party "will cooperate on Tohoku's reconstruction but ask the public if (Noda) still has their confidence after the budget is passed," demanding that the prime minister dissolve the Lower House and call a snap election after the legislation clears the Diet.

On Sunday, Ishihara said the LDP will "regard next year's ordinary Diet session as the main battlefield and demand (that Noda call) an election then."

Nakano of Sophia University slammed the LDP's one-track goal of ousting the DPJ and failing to offer any clear alternatives on how it would govern the nation.

"They're (calling for a snap election) just for their own benefit. They should realize they haven't changed since they became an opposition party."

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