Following Prime Minister Noda Yoshihiko’s (DPJ) policy speech last night, blogs are lighting up with discussions on the proposed increase in the consumption tax from the current level of 5% to 10% (a rate still below the VAT and General Sales Tax rates of OECD countries) within the next four years.
In a little political craftsmanship of the Prime Minister, instead of coming out and calling for a rise in the consumption tax rate and offer himself up to the hounds of the opposition, he quoted former Liberal Democratic Party (LDP) Prime Ministers Fukuda Yasuo and Aso Taro in their own policy speeches outlining a means to return to fiscal sanity (Link in Japanese).
Those reading this from an American’s perspective might recall how Obama used the Republican plans for health reform in response to “Hillarycare” in the 90s (including “Romneycare”) and failed to convince modern Republicans that they at least at one time supported such a system. How will the opposition respond?
The same Mainichi article quotes a Komeito Party rep as saying they are willing to enter talks, but entering talks in no way means they support the increase in the tax rate.
Of course, none of this will matter if Noda can’t corral his own horses behind him. Ozawa Ichiro (former DPJ Party Leader, currently serving punishment within the DPJ for shady campaign financing) has already stated that he and his group in the DPJ (the “Ozawa Children”) will not support a tax increase. Those who follow Japanese politics closely will also remember that a few DPJ MPs left the party late last year over the issue of the consumption tax. Those freshly elected DPJ reps were elected in the wave of 2009 and don’t feel they are established enough in their districts to support an unpopular—but needed in the eyes of party leadership— policy.
Will the consumption tax be the issue that finally breaks the camel’s back? They said the base issue would do it under Hatoyama and that the nuclear issue would do it under Kan. It’ll ultimately be a decision each lawmaker will make on an individual basis assessing what will put them in the best position to be re-elected.