TOKYO (MNI) – The public approval ratings for the cabinet of Prime
Minister Naoto Kan have tumbled as the minor cabinet reshuffling last
month failed to regain confidence in the government’s ability to push
key budget and tax bills through the hung parliament, according to
weekend surveys by Japanese newspapers.

The polls showed that the majority of eligible voters now want Kan
to call a snap election or resign after 16 politicians of the ruling
Democratic Party of Japan submitted last week a request to leave the
party caucus over party politics.

The approval rating for the cabinet dropped to 19% in a weekend
poll conducted on Feb. 19 and 20 by the Mainichi Shimbun newspaper, down
from 29% in its January survey.

The reading was the lowest since the Democratic Party of Japan took
power away from the Liberal Democratic Party in September 2009 and it
also fell below the key 20% mark which often resulted in the resignation
of past prime ministers.

Kan took office in June last year after his predecessor Yukio
Hatoyama resigned, with his public support slumping to the 20% threshold
over broken promises on the relocation of a controversial U.S. air base
on the southern island of Okinawa among other issues.

The Mainichi poll also found that the disapproval rating for Kan’s
cabinet rose 11 percentage points to 60% following a minor increase in
January in the wake of the reshuffling of the cabinet last month and
that some 60% of respondents said Kan should call a snap election.

Last week, 16 DPJ lawmakers, including many supporters of former
party leader Ichiro Ozawa, tendered resignation from the party’s caucus
after DPJ executives proposed suspending Ozawa until the conclusion of
his trial over political funding. Kan has kept Ozawa and his aides away
from key government posts.

The drop in the public ratings also came after opposition parties
threatened to reject some of key bills for the next fiscal year’s budget
and calls from Kan to begin discussing tax reforms during the current
150-day parliamentary session ending on June 22.

The Social Democratic Party, a former junior partner of the DPJ’s
coalition government, plans to oppose a bill that would enable the
issuance of deficit-covering bonds and another bill that would review
taxation, Kyodo News and other Japanese media reported on the weekend.

Kan last month called for cross-party discussion on tax reforms,
which include a possible increase in the sales tax rate from 5%, but
none of opposition parties has so far accepted his request.

In another blow to Kan, DPJ-backed candidates have lost in both the
Aichi gubernatorial and Nagoya mayoral elections in central Japan, which
were seen as a bellwether for this spring’s quadrennial regional
elections.

Former Nagoya Mayor Takashi Kawamura, who was also a DPJ lawmaker
until two years ago, beat Shinichiro Misono, backed by the DPJ, in the
mayoral election, while Hideaki Omura, a former House of Representatives
lawmaker, won the race for Aichi governor, beating Yoshihiro Ishida, a
former DPJ lower house member backed by the DPJ.

Polls from other media also confirmed a slump in public confidence
in Kan’s government.

A poll conducted by the Asahi Shimbun daily showed that the
approval rating declined to 20% in a Feb. 19-20 poll from 26% in January
while the disapproval rating surged to 62% from 54%.

The Asahi survey also showed that 49% of the respondents want Kan
to resign, exceeding 30% of the respondents who want him to stay.

Last month Kan appointed former Finance Minister Kaoru Yosano as
Economic and Fiscal Policy Minister, a move aimed at breaking the
impasse on starting parliamentary debate on the next fiscal year’s
budget and launching debates on an overhaul of the nation’s tax system.

Kan has promised to hammer out comprehensive measures on tax reform
by June this year. Yosano is an advocate for raising the sales tax rate
in order to better finance growing public medical and pension costs.

Standard & Poor’s last month cut Japan’s sovereign debt rating to
AA-, the fourth-highest level, citing the DPJ’s lack of “coherent
strategy” in dealing with a debt approaching 200% of gross domestic
product.

Thomas Byrne, senior vice president of Moody’s Investors Service,
said recently that any policy drift or friction that prevents passage of
tax reform bills in parliament would be a credit-negative development,
while maintaining a stable outlook on Japan’s Aa2 rating for now.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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