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Saturday, March 31, 2012

ANALYSIS

Passage hinges on Ozawa, opposition


Staff writer

Despite the Cabinet's approval Friday of a sales tax hike bill that sparked months of dissent and resistance from the ruling party's ranks, Prime Minister Yoshihiko Noda may find that in the deadlocked Diet, the more things change, the more they stay the same.

Noda's plan to raise the levy is still fiercely opposed by many Democratic Party of Japan members loyal to ex-leader Ichiro Ozawa, while the opposition camp will use every means necessary to grind Diet deliberations to a standstill and force a snap poll.

Ozawa, who heads the DPJ's largest faction, comprising around 120 members, says the bill would breach the policy platform on which it was voted to office in the 2009 general election.

It would only take half of Ozawa's loyalists to oppose the proposed tax hike in the Lower House for the bill to be vetoed.

"Noda may have done everything he can within the DPJ, but passing the tax hike bill through the Diet appears almost impossible at present," said Koichi Nakano, a political science professor at Sophia University in Tokyo.

Noda's problems, however, extend far beyond the legislative gridlock. Shizuka Kamei, who heads Kokumin Shinto (People's New Party), the DPJ's junior partner, already has said he will quit the ruling coalition. "(Abandoning the DPJ) is a reasonable decision," he said Thursday.

Still, not all Kokumin Shinto members are as deeply opposed to the bill as Kamei, and his hardline stance has thrown the tiny party into disarray. Six of its eight members, including financial services minister Shosaburo Jimi, want to remain in the ruling camp long enough to pass a postal reform bill, one of the party's key policies.

With only two Kokumin Shinto members seeking to break away immediately, the party's internal chaos is unlikely to have much impact on Noda's administration, political analyst Minoru Morita said.

"It may affect Noda's administration indirectly, by showing Noda is blindly pressing ahead with the tax hike plan, but their influence is far smaller than Ozawa's intraparty group," he said.

The prospects of a tax rise, therefore, depend on Noda winning over DPJ members hostile to the bill and persuading the Liberal Democratic Party and New Komeito, the dominant opposition forces, to cooperate in the Diet.

In terms of internal dissent, senior DPJ executives made some compromises to the bill before it was submitted to the Cabinet, hoping to appease its opponents. Most notably, they inserted a provision setting nominal economic growth of 3 percent as a prerequisite for any hike, and deleted a section that allowed scope for additional increases to the levy beyond 2015.

But such moves failed to placate Ozawa's supporters, who were furious when policy chief Seiji Maehara abruptly terminated internal discussions on the legislation Wednesday, the sixth day of debate, by telling them to "leave the decision" up to him.

The DPJ executive endorsed a bill later that day to raise the sales levy to 8 percent in April 2014 and to 10 percent in October 2015.

Many DPJ members are frustrated by the party's failure to achieve the cost-cutting measures promised during the 2009 election, including a plan to scrap 80 Lower House seats and to slash lawmakers' annual salaries by ¥3 million.

Talks with the opposition over restructuring the Lower House reached an impasse in early March, and with no deal in sight the DPJ decided to prioritize reducing lawmakers' wages instead. However, little progress has been made in this area, either.

Noda's other daunting challenge is to convince the LDP and New Komeito to cooperate over the bill's passage. Since the opposition controls the Upper House and can block government legislation, Noda can't enact the legislation without their support. But the two opposition parties have rejected all his entreaties so far, refusing to hold any discussions on his tax plan outside the Diet.

The opposition even prevented the DPJ from passing the 2012 budget in time for the new fiscal year, humiliating the ruling party into drafting the first provisional budget in years.

Although the LDP and its president, Sadakazu Tanigaki, in principle advocate a consumption tax increase, Sophia University's Nakano said he is unlikely to cooperate with Noda.

"The LDP under Tanigaki's leadership won't support the DPJ's tax hike plan. Their aim is to force Noda into dissolving the Lower House for a snap election," Nakano said.

The stakes are also high for Tanikagi, though. If he fails to back Noda into a corner by the end of summer, LDP members are unlikely to re-elect him in the party's presidential election in September.

Realizing this, the LDP chief is pulling out all the stops to force Noda to dissolve the Lower House and call an election.

"If the prime minister plans to stubbornly persist with his tax plan, he should dissolve the Diet, promote the sales levy hike as his key campaign pledge, and ask the public to vote for him," Tanigaki said Thursday.

Scenting blood, the LDP and New Komeito also have decided to submit a censure motion against Defense Minister Naoki Tanaka, who was only appointed in January, targeting his inexperience and limited knowledge on security.

The opposition's strategy is clear: To seize every opportunity to inflict pain on the DPJ and to exploit the party's deep divisions to destroy Noda's administration.

"They may be considering a political realignment . . . (and) Ozawa's group still has a lot of power inside the DPJ," said Nakano. "Anything could happen by summer."

Then again, maybe not.

Any move by the party heavyweight to overthrow Noda at this point is considered unlikely, as his supporters desperately want to avoid an early dissolution of the Lower House, fearing the entire party could be unseated in a snap poll. Ozawa loyalists are instead urging the party's executives to promote the DPJ's successes before pitching a greater tax burden to the public.

"None of the DPJ members wants an election now because they know they'll lose," said political analyst Morita. "The likelihood of a snap election is diminishing."

Ozawa is currently on trial over shady political funds reports, and the charges have tainted his image among parts of the electorate.

Nakano summed up the dilemma facing the opposition: "The problem is they'll need Ozawa to widen the DPJ's divisions, and he doesn't have the public's support because of his funds scandal. Teaming up with him could be a risky move for the opposition."



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