Bill's passage moves debt-hit Japan closer to doubling sales tax
March 31, 2012, 12:05 am TWN
TOKYO -- Japan's cabinet Friday approved a bill to double the nation's sales tax to 10 percent, overcoming an earlier scare after the head of a coalition partner said it could leave the government over the issue.
The agreement is a step closer to a deal the government says will help rein in the nation's gigantic public debts, but it is still likely to face a rocky road.
A group of lawmakers from the ruling Democratic Party of Japan (DPJ) is threatening to vote against it, due mainly to worries that a tax increase would derail Japan's uncertain economic recovery.
The DPJ's former head and major political power broker Ichiro Ozawa, who leads the party's anti-tax group, told local media on Thursday that he “can't support a simple tax hike.”
“If (Prime Minister Yoshihiko) Noda pushes for a publicly unpopular tax hike, his party support base will disappear,” Ozawa was quoted as saying.
The opposition, which controls Japan's upper house of parliament, is also unhappy with the bill and could scupper its passage.
The law would see a sales tax rise from 5 percent to 10 percent by 2015.
Ahead of the crucial vote late Thursday, Shizuka Kamei, the head of the People's New Party, said his faction was divided on the issue and could leave Noda's fragile coalition.