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Monday, Jun 25, 2012 5:15 AM UTC

Japan’s PM faces intraparty revolt over tax hike

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Topics: From the Wires,

TOKYO (AP) — A battle between rival blocs in Japan’s ruling party escalated Monday ahead of a tax hike vote that is threatening to split the party and weaken Prime Minister Yoshihiko Noda’s hold on power.

The legislation expected to come before Parliament on Tuesday includes a doubling of the current 5 percent sales tax. Noda says it is needed to fight Japan’s swelling national debt, but the political maneuvering has overshadowed economic debate on the bill.

Media reports Monday said more than 50 ruling party lawmakers plan to vote against it. That would not be enough to kill the bill, because it also has opposition party backing.

But the reports also said dozens of lawmakers are considering leaving the ruling party altogether in protest. If 54 or more do so, Noda’s party would lose its majority in Parliament’s lower house and he would be vulnerable to a no-confidence vote.

Noda, who took office last September, has said he’s ready to stake his career on the tax bill. Public opinion seems to be split between those who believe action must be taken to shore up the economy and those who are more concerned about how it will affect their own personal finances.

The revolt is being led by Ichiro Ozawa, Noda’s biggest rival in the ruling Democratic Party. Opponents of the plan to double the sales tax over three years say that it will stall economic growth and reduce consumer demand.

Ozawa helped create the Democratic Party but has since fallen out with its leadership and been embroiled in allegations of corruption. He has threatened to bolt before, and his 1993 departure from the party that previously ruled the country helped set the stage for the Democrats to rise to power.

Both sides held talks Monday and jockeyed for an advantage as the vote in Parliament neared. Several newspapers reported Ozawa would fall short of the 54 mark. That would still be a major setback for Noda, who has struggled since taking office to deal with the economic impact of last year’s devastating earthquake and tsunami.

More Eric Talmadge.

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