TOKYO (MNI) – Ruling Democratic Party of Japan leaders have wrapped
up a week-long party debate on plans to raise the 5% sales tax, moving
on to a cabinet decision on Friday while some DPJ lawmakers remain
unhappy about economic conditions for a hike.

During the last session of the debate that ended in the early hours
of Friday, the DPJ leadership offered some compromise to those opposed
to a consumption tax increase, public broadcaster NHK and newspapers
reported.

Under a revised bill, the government will “pursue policies” to
realize 3% nominal economic growth, or 2% real growth, on average
between fiscal 2011 and fiscal 2020, but these figures are not
positioned as conditions required to raise the tax, they said.

The government will stipulate that it will make a comprehensive
assessment and consider various steps, including halting a tax hike, if
economic conditions worsen, the reports said.

The government will also drop any mention of potential hikes beyond
10%.

Prime Minister Yoshihiko Noda has promised to send tax reform bills
to the Diet by March 31, staking his political life on winning approval
in the hung parliament this year, hopefully during the current 150-day
ordinary session that ends on June 21.

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.

But the opposition parties, which control the upper house, are
demanding that Noda dissolve the lower house of parliament and call snap
elections after submitting the tax bills.

Sadakazu Tanigaki, who heads the main opposition Liberal Democratic
Party, has said he would consider cooperating with the DPJ in pushing
for a sales tax hike but only after parliamentary elections.

Shizuka Kamei, the head of People’s New Party, a small ruling
coalition partner, is also opposed to a tax hike, threatening to leave
the government.

Despite the political wrangling, public support for the Noda
cabinet has risen slightly.

The approval rating for the cabinet rose two percentage points to
34% in a March 23 weekend poll conducted by Nikkei Inc and TV Tokyo Corp
from a prior survey in February. The disapproval rating fell two
percentage points to 54%.

The Nikkei survey also found that 53% disapprove of the
government’s plan to raise the sales tax, while 38% approve.

But 58% of the respondents think a consumption tax increase is
needed in order to keep social security programs financially viable,
while 33% said such a step was unnecessary.

tokyo@marketnews.com
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