Noda set for crucial test in Japan sales tax vote

June 26, 2012 | 08:55
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Japanese lawmakers are set to vote on controversial tax bills Tuesday, with Prime Minister Yoshihiko Noda facing a sizable rebellion from his fractious party that could threaten his government.

Japan's Prime Minister Yoshihiko Noda speaks during a press conference at his official residence in Tokyo on June 8. Japanese lawmakers are set to vote on controversial tax bills Tuesday, with Noda facing a sizable rebellion from his fractious party that could threaten his government

The lower house will begin a plenary session at 1:00 pm (0400 GMT) which will see parliamentarians cast ballots on proposals to double sales tax in a bid to chip away at the country's huge debt mountain.

After furious horse-trading between the ruling Democratic Party of Japan (DPJ) and the two main opposition parties, the bills, which will also revamp social security, are expected to go through.

But more than 50 DPJ members, led by former powerbroker Ichiro Ozawa, have set their stall firmly against the tax rise, with some threatening to create a breakaway party.

Noda, who has staked his premiership on hiking sales tax in a bid to partially plug Japan's gaping fiscal hole, spent Monday trying to convince a wayward wing within his own indisciplined party to fall into line.

"From the bottom, the bottom and the bottom of my heart, I want to ask you to act together and support the passage of the bills," Noda told a party meeting on the eve of the vote, bowing deeply.

Analysts say if 54 DPJ lawmakers in the lower house make a break for the exits, the ruling coalition -- the DPJ and its minor partner -- would lose their majority in the chamber, which is authorised to elect prime ministers.

"The party is now facing a crisis of break-up," Tetsuro Kato, professor of politics at Waseda University, told AFP, saying Noda may call snap elections soon, "depending upon results from the vote".

Sadakazu Tanigaki, president of the largest opposition Liberal Democratic Party, which has swung behind the tax rise bills, told reporters that a general election was in the "national interest".

If Ozawa and his allies have the numbers, opponents will likely seize the opportunity to strike while Noda is wounded and call a confidence vote. If that motion passes Noda will have no choice but to go to the polls.

Noda has warned that the future of the world's third-largest economy rests on tackling its hulking public debt, which at more than double the GDP, is proportionately the world's largest.

Opponents of the planned tax rise from the current five percent to 10 percent by 2015 say any increase in household bills would derail Japan's uncertain economic recovery.

AFP

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