politics

DPJ to present revised tax hike bill to cabinet despite opposition

14 Comments

The ruling Democratic Party of Japan (DPJ) has decided to submit a revised bill on the proposed consumption tax hike to the cabinet for approval on Friday despite lingering opposition from within the party.

A group of DPJ lawmakers has been debating the wording of the bill since March 14, but were unable to reach a consensus. Just before dawn on Wednesday, DPJ Policy Affairs chief Seiji Maehara ended debate on the issue, triggering protests from some members, TBS reported.

The bill proposes raising the consumption tax to 10% by October 2015.

The main point in dispute is a clause that a consumption tax hike would be dependent on economic growth. One side wanted to include numerical targets such as economic growth rates, while opponents did not want specific figures included in the clause.

The revised version will contain a clause stipulating that a tax hike will be implemented if the economic growth rate is around 3%, but that the figure is not an absolute condition, party sources said, according to TBS.

Prime Minister Yoshihiko Noda told reporters on Wednesday night that he felt the bill incorporated most of the various points of view. He said that after gaining cabinet approval on Friday, he will submit the bill to the Diet.

However, opponents are still not satsified. Former DPJ leader Ichiro Ozawa said he will submit to the party leadership a petition containing the names of 70 party members opposing the bill and protesting the decision to end the debate.

DPJ Secretary General Azuma Koshiishi said that he understood calls for the debate to continue, but said time was running out and he asked party members to respect the decision.

Meanwhile, Shizuka Kamei, the leader of the DPJ's junior coalition People's New Party, said that if the cabinet approves the revised bill, he will have no choice but to pull his party out of the coalition, NHK reported.

Kamei said that when his party joined the coalition, it promised that it would not endorse any tax increases.

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Tax hike will give birth to New PM and New Coalition, not good?!

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Meanwhile, Shizuka Kamei, the leader of the DPJ’s junior coalition People’s New Party, said that if the cabinet approves the revised bill, he will have no choice but to pull his party out of the coalition, NHK reported.

Given the added value he (Kamei) brings, that is probably a bonus, but if getting the bill through depends on his support then Noda will be in sheepdip.

Kamei wants to spend all the tax revenues for the next 10 years within the next 10 months (and all in the regions, not metropolis), so probably best to cut him off now.

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The tax hike will be like dropping a nuclear weapon on consumption in Japan. Already depressed spending will drop off more. That leads to the loss of jobs and in turn will put even more pressure on government debt to cover benefits for those jobless workers.

This is not the answer in this economy. And the public do not support it. There are other solutions that would achieve positive results and gain public confidence in government.

Properly address spending, corruption, graft and kick backs. Apply dramatic changes in pricing so that the government does not get ripped off. Cut off unnecessary programs and projects. There are so many that deliver nothing to the public. Introduce measures to stimulate small business and job creation to get more people back to work and paying existing taxes. Open Japan to more international business by relaxing how Japan engages foreign business. More companys may then consider Japan. Open immigration and let in more workers to fill the gaps left by declining population. Japan needs health care, tech and other workers and there are lot of qualified people around the world who could gladly come work here.

This is destined to bring down Noda and his party and restore the much hated LDP back to power if they are not very careful.

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tkoind2, I absolutely agree with you that the proposed tax increase will devastate the barely-breathing economy, just as every tax increase has negatively affected the economy. The problem is that the politicians really answer to no one but themselves and could care less about the people. The people are also culpable for electing such wolves.

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Agree about policians are wolves. But immigration is what Japan will never accept...better have robots than uncivilized people. This tax hike will gladly provide some kind of inflation and force company to improve their efficiency as I don't believe price tags will change that much. Average in the world is more like 20%,so Japan is just catching up.

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If the consumption tax hike is mostly used for transfer payments to needy retired persons, the effect on the economy in Japan will likely be zero. Whatever got taxed will be spent by those receiving the tax revenue as pension benefits.

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Akin to tightening the noose on the economy and kicking the wobbly chair it is standing on

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" as I don't believe price tags will change that much" Price tags don't need to catch up. The 10% and later more, will do it enough on their own.

You are forgetting that something like 17% (reported, so actual is likely much higher) of Japanese now live under poverty. What was it, like 40% of single women also live in poverty. With an average salary of 180,000 how can they absorb any additional costs.

You are also ignoring that income, city tax and social welfare rates have hiked. Not to mention enery rates. If you are upper middle class then, sure a tax hike will not kill you or impact you that much. But the average Japanese family are middle class only in name. Economically they are struggling and already not spending. If they reducing spending further you will invite massive deflation just to keep people spending. Something Japan's business cannot sustain.

Like I said, just watch and see this prediction come true, a tax hike will be like dropping a tactical nuke on consumer spending and by proxy the greater economy. Mark these words in stone.

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Fredrick. Not really. You are assuming that the transfer would offset existing spending of some kind. It won't and even the proponents are not suggesting that. They are clearly saying this is to "Sustain" their spending, not add to it.

Plus you need to factor in the fact that newly retired folks will be living on less and thus spending less than when they were working.

And all this assumes that the government will actually use the tax revenues in the way they say. But the track record here is that there will be considerable waste and graft. So the real transfer of wealth here is more likely to be from all of us to a very few of them where it will disappear into red tape.

This will cause harm not good.

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And all this assumes that the government will actually use the tax revenues in the way they say. But the track record here is that there will be considerable waste and graft. So the real transfer of wealth here is more likely to be from all of us to a very few of them where it will disappear into red tape.

10million% correct, until the govt & nagatacho can show they will repsect our taxes they are getting now we wud be exrtremely foolish to sign off on this as it will be pure waste!

As I have said a million times CUT all ministries budgets by 15%, contruction & finance by 20%, as they can all EASILY take that amount of cutting, DO THAT & then get back to us about more

Japanese wud be extremely foolish to sign off on an increase without some serious cuts first, we need to weed of graft & amakudari. Thing is politicians & nagatacho WILL NEVER ALLOW THIS!

So as I see it we are all fracked, there is no way out, if 3/11 cant spark REAL change in Japan then likely even Tokyo getting hammered by a huge quake might not even be enough to change the theiving ways of Japan inc!

Its time we all got our life rafts ready we may need them sooner than you think, exit plans folks, I have started planning mine, you all wud be wise to do likewise!

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How come not one of these idiots comes out and says, we want to raise it, but we want to make food zero tax, medicine and health checks zero tax, baby items zero tax, and school elated costs zero tax? Why not??? What is wrong with this place?

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A bunch of way too old men unable and unwilling to change their corrupted ways in charge of the nation- is what's wrong with this place Jgirl...as has always been the case. Tkoind2 - completely agree with you ..

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The tax hike needs to be passed and this is very serious along with healthy GDP growth plan

If not passed, Japan will be downgraded accordingly in global financial market heading to total collapse. No joke, Japan!

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I wouldn't be surprised if Noda, Okada and the cabinet left the DPJ and went and joined the LDP at this point. They appear to be begging to be allowed to be members.

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