Cabinet approves sales tax hike


The Cabinet of Prime Minister Yoshihiko Noda has finally approved the raising of the consumption tax to 8% in April 2014 and to 10% in October 2015.

The measure has now been lodged with the House of Representatives where it will have to be voted through in what is guaranteed to be a rocky passage.

The Cabinet decision was not without drama of its own. A smaller coalition party, the People’s New Party (PNP – Kokumin Shinto) has managed to split itself over the decision. Their leader, Shizuka Kamei has said that he will not vote for the increase and says the alliance with the ruling Democratic Party of Japan (DPJ) is over. However, his deputy leader, Shozaburo Jimi, along with five others of the eight members has signed the Cabinet approval and says the alliance is intact.

The opposition Liberal Democratic Party (LDP) has said that it will oppose the tax rise and has called on the DPJ to call an immediate general election.

Although the DPJ has lost members since the 2009 election when it took 308 of the 480 seats in the House of Representatives (lower house) it can still command over 290 votes. However, the battle in the House of Councillors, the Diet’s upper house will be a much tougher battle.

Another spoiler could be the DPJ faction led by Ichirō Ozawa, about 50 members, who are also opposed to the tax hike.

Tagged with:

More detailed briefing on the politics and risk of doing business in this country is available to clients and subscribers. If you would like to know more then please contact enquiries@tradebridgeconsultants.com