Japan’s Ruling Party Split as Lawmakers Approve Controversial Tax Hike

Posted June 26th, 2012 at 6:15 am (UTC-5)
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Japanese lawmakers have approved a controversial tax hike plan to help curb growing public debt, despite a rebellion by some in Prime Minister Yoshihiko Noda's ruling party.

The plan to double the sales tax to 10 percent over three years easily cleared Japan's lower house of parliament Tuesday. But 57 members of the ruling Democratic Party of Japan failed to back the bill, exposing a deep party rift that could weaken Mr. Noda's grip on power.

Dozens of DPJ members who oppose the bill have threatened to form a breakaway party. If more than 54 lawmakers decide to leave, the Democrats would lose their majority in the more powerful lower house.

Tomohiko Taniguchi, a former Japanese diplomat and a professor with Japan's Keio and Meiji universities, says the political ramifications are unclear until Mr. Noda and party leaders decide whether to discipline the rebel lawmakers.

“It will seriously affect the political capital of Prime Minister Noda if he is going to give a lukewarm treatment to those people. By the same token, he has shown to the public that he has been a conviction politician who has brought Japan to absorb some of the bitter bills, including this one.”

Prime Minister Noda made passage of the tax hike plan the main goal of his term in office, saying it is necessary to reduce Japan's debt, which exceeds two years' worth of its economic output. But some within the party believe Japan's already fragile economy cannot handle the tax increase.

Taniguchi says there is still a possibility that Mr. Noda could make a move to dissolve parliament and call for snap elections if the DPJ loses its majority in the lower house. But he says the move seems unlikely, given what he says is the prime minister's political patience.

The bill, which would also revamp Japan's social security system, is expected to pass the opposition-controlled upper house.