TOKYO (MNI) – Japan’s lower house of parliament was dissolved on Friday, as
promised by Prime Minister Yoshihiko Noda in a surprise public announcement
during parliamentary debate with opposition leaders this week.

This sets the stage for a showdown between the ruling Democratic Party of
Japan and the main opposition Liberal Democratic Party in general elections for
the 480-seat House of Representatives
(lower house).

Voters are expected to go to the polls on Dec. 16 to deliver their second
judgment on a national level since the DPJ took power away from the LDP in 2009
after a landslide win in lower house elections.

During this period, the world has gone through two major slumps, first
triggered by the collapse of Lehman brothers and then by the European sovereign
debt crisis — clouding the prospects for Japan’s recovery from slow growth and
years of deflation.

Noda, the third prime minister under DPJ, has been seeking ways to trim
soaring public debt while supporting the economy, contain the nuclear crisis
caused by the March 2011 earthquake disaster and counter the drag from the yen’s
rise and global slowdown on exporter profits.

In July 2010 national elections, the ruling coalition led by the DPJ lost a
majority in the upper house.

During the 2010 election campaigns, the Prime Minister Naoto Kan called for
parliamentary debate on the need to raise the 5% sales tax in order to secure a
stable funding source for additional public spending on job creation, which he
said should help Japan move out of stubborn
deflation.

Kan mentioned an idea of hiking the sales tax rate to 10% in the medium
term, which appeared to have come as an abrupt proposal to some voters,
prompting the public approval rating for the Kan administration to slump.

Two summers later, however, Noda won support from the leaders of the two
main opposition parties for doubling the consumption tax rate by 2015 in
exchange for a value promise to dissolve the lower house and call a snap
election.

Opposition parties, which control the 242-seat House of Councilors (upper
house), has been calling on Noda to call an election for the more powerful lower
house but he has been cautious amid falling public support for his cabinet after
telling the opposition camp in August that he would do so “in the near future.”

Noda then came under fire from the opposition leaders for not delivering
his promise sooner, further delaying parliamentary approval of a key bill that
will allow the government to issue debt for financing spending in the current
fiscal year that began on April 1.

On Wednesday the embattled Prime Minister caught the opposition leaders off
guard by making a rare public proposal that he would dissolve the lower house of
the Diet on Friday if opposition parties agreed to the ruling coalition’s plan
to cut parliamentary seats in electoral reform.

In response, Shinzo Abe, who heads the LDP, told reporters after the debate
that his party will endorse the reform plans in parliament early next year.

The DPJ beat the LDP in 2009 by promising to boost Japan’s fiscal health
through slashing “wasteful” government spending and reallocating tax money for
projects that would support families with children and reduce unemployment.

But the DPJ government soon hit a policy wall, realizing that there was
only so much it could do to trim spending in order to generate funds for
necessary public programs.

In August 2012 the Japanese parliament enacted by majority vote legislation
that would double the current 5% consumption tax by 2015 and improve social
security services on condition that the economy continues to recover steadily.

The government plans to hike the tax rate to 8% in April 2014 and to 10% in
October 2015.

–email: msato@mni-news.com

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