TOKYO (MNI) – Japanese Prime Minister Yoshihiko Noda on Friday
renewed his pledge to win parliamentary approval of tax and social
security reform bills during the current 150-day session to June 21, a
step toward doubling the 5% sales tax in the next few years.

“We are now entering a stage at which the ruling and opposition
parties will debate the issue,” he told a news conference.

In order to secure stable sources of funding for public pensions
and health care, the government plans to raise the consumption tax rate
to 8% in April 2014 and to 10% in October 2015.

Noda repeated that a sales tax hike would be “fair” in sharing
higher social security costs among the public and offer a “reliable”
source of tax revenues that is less influenced by economic cycles and
demographic changes than income and business taxes.

Noda is staking his political life on paving the way for a sales
tax hike and has cleared the first small step by getting his cabinet
ministers to sign the tax bills and sending them to the Diet by March
31, as promised.

He still has to figure out how to win a majority ‘yes’ vote in the
hung parliament in the next two months or so. The ruling coalition holds
a majority in the lower house but the opposition parties control the
upper house.

The opposition camp in the Diet is demanding that Noda dissolve the
lower house of parliament and call snap elections.

Noda also faces stiff opposition to a tax hike from some lawmakers
of his own Democratic Party of Japan as well as Shizuka Kamei, who heads
the People’s New Party, a small ruling coalition partner. Kamei told
Noda that his party was leaving the coalition but most other members of
Kamei’s party said they would stay in the government.

The prime minister said he will continue seeking government
spending cuts and an agreement between the ruling and opposition parties
on electral reforms before April 2014, when the first step of a sales
tax hike is planned.

“The government will continue keeping in close contact with the
Bank of Japan in order to overcome deflation,” said Noda.

tokyo@marketnews.com
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