Japanese Prime Minister Faces Setback on Tax Increase

[alp227]

Source: NYT

The unpopular government of Prime Minister Yoshihiko Noda suffered another setback on Monday when the largest faction of his Democratic Party quit over a proposed tax increase, leaving the party barely in control of Parliament's lower house.

Ichiro Ozawa, a former party head and its onetime power broker, led 49 other lawmakers in resigning from the party to oppose a bill backed by Mr. Noda to double the national sales tax to 10 percent by 2015. While the prime minister said the increase was needed to defray the costs of Japan's rapidly aging population, Mr. Ozawa called it a betrayal of the party's pledge not to raise taxes, made before a historic election swept it to power three years ago.

The defection left the Democrats with only 251 of the 480 seats in the lower house, the more powerful of Parliament's two chambers because it selects the prime minister. This could worsen Japan's chronic political paralysis by weakening the Democrats' grip on Parliament when the opposition already controls the upper house.

Read more: http://mobile.nytimes.com/2012/07/03/world/asia/japanese-prime-minister-faces-setback-on-tax-increase.xml

[PoliticAverse]

1. Yet another country waiting for a crisis before dealing with their unsustainable financing methods.

[Art_from_Ark]

2. Doubling the regressive consumption tax is not the way to go

The Japanese economy is hurting in many sectors, and taking another 5% out of the average consumer's disposable income isn't going to help. The introduction of the consumption tax in 1989 helped start one recession, and raising the rate to 5% in 1998 aggravated another recession.