Opposition to tax hike within LDP adding to unpopular Aso's troubles+

TOKYO, Jan. 20 Kyodo -
Prime Minister Taro Aso has no time to take a breather. The opposition bloc's
offensive against his cash handout plan has lost steam somewhat, but he is now
troubled with growing opposition within his Liberal Democratic Party to his aim
to boost the consumption tax in fiscal 2011.
''With the whole world suffering from a major economic recession, Japan is
probably the only nation that is planning to increase its consumption tax,''
former Chief Cabinet Secretary Yasuhisa Shiozaki, one of those actively
opposing the tax hike, told reporters after an LDP Policy Research Council
meeting on Tuesday.
Another heavyweight, former LDP Secretary General Hidenao Nakagawa, said, ''An
increase in the consumption tax could lead to a decline in overall tax revenues
such as income tax, corporate tax and residence tax.''
At the meeting, participants discussed the government's plan to specify fiscal
2011 as the year for increasing the current 5 percent sales levy in an
additional clause for a bill to amend the nation's tax system.
Ichita Yamamoto, a House of Councillors lawmaker, said, ''I told the meeting
that in view of current Japanese economic conditions, sending out the message
that the government plans to raise the consumption tax in fiscal 2011 could
have a negative impact on the economy, and 'fiscal 2011' should be removed from
the clause.''
Joining the chorus, Kenichi Mizuno, a House of Representatives lawmaker, said,
''Raising consumption tax could put a break on ongoing administrative reform''
to eliminate wasteful spending.
The bill is among those needed to implement a proposed fiscal 2009 budget,
which was submitted to the Diet on Monday.
The government is hoping to endorse the bill at a Cabinet meeting Friday and
the LDP leadership is aiming to complete all party procedures by Thursday, but
they are unlikely to go smoothly.
If Aso, whose support ratings are already in tatters, fails to contain the
opposition within his own party, his administration could be put on the line,
forcing him to dissolve the House of Representatives for a snap election.
That is because if 16 or more lawmakers from the ruling coalition of the LDP
and its junior coalition partner, the New Komeito party, fail to support the
budget-related bills in the lower house, the ruling parties would be unable to
secure the two-thirds majority required to get them passed.
As the House of Councillors is currently controlled by the opposition bloc,
bills are often rejected by the upper house. But they can still be enacted
following a revote in the lower house.
Asked if he has any intention to rebel, Mizuno said, ''The situation could
become more amusing.''
The intense debate over the consumption tax has not come out of the blue.
In late December, the government endorsed a medium-term tax reform program
specifying fiscal 2011 as the year for increasing the consumption tax to cover
ballooning social security costs, provided that the economy improves by that
time.
The scheme was finalized after twists and turns as the New Komeito party
resisted Aso's instruction to clearly state that the consumption tax hike would
be implemented in three years, for fear of losing votes in the upcoming general
election.
The prime minister has pledged to revive the economy in three years and then
raise the tax.
But some LDP lawmakers denounced the party's executives, saying that the
program was finalized without thorough discussions by rank-and-file members.
During Tuesday's deliberations at the upper house's Budget Committee, Aso
sought understanding for the need to clearly stipulate the target year for the
proposed tax hike, saying, ''We need to be prepared so we can move (to boost
the consumption tax) when the economy recovers.''
==Kyodo