Prime Minister Yoshihiko Noda and political heavyweight Ichiro Ozawa remained far apart on tax hike legislation during a May 30 meeting, but they left open the possibility of discussing the issue again.
Progress was not expected in their talks on Noda’s plan to double the consumption tax rate to 10 percent by 2015. The question was whether failure to reach an agreement in the talks would prompt Ozawa to make moves to leave the Democratic Party of Japan--along with his intraparty group, the largest in the DPJ.
Instead, both Noda and Ozawa left open the possibility of holding another meeting.
The meeting was arranged and attended by DPJ Secretary-General Azuma Koshiishi, an Ozawa ally who has been trying to keep the ruling party together.
Noda asked Ozawa for his cooperation in passing the consumption tax legislation through the current Diet session.
But Ozawa replied, "Because it would be a major tax hike of close to 13 trillion yen ($163.6 billion), I cannot give my support."
After the 90-minute meeting, the three participants separately met reporters and explained the contents of the meeting.
The prime minister said: "While Ozawa said he was not opposed to raising the consumption tax rate, there was a difference in the timing. We did not reach the point of having him vote in favor of the legislation. I want to think (about another meeting) after giving the matter further thought."
Ozawa indicated he would attend further talks if asked to do so.
Asked about the possibility of another meeting, Koshiishi said, "They will hold it if it is necessary and not have it if it is not necessary."
At the start of the meeting, Noda explained the significance of simultaneously revising the taxation and social security systems.
"We must come up with a stable revenue source," Noda said. "With the difficult fiscal circumstances that we face, we have no time to delay. My position is to pass the legislation in the current Diet session. I ask for your cooperation."
In response, Ozawa said: "No work has begun on greater autonomy for local regions and thoroughly eliminating waste. It cannot be called simultaneous reform because the consumption tax rate hike issue alone is receiving all the spotlight.”
He also said that Japan has not yet recovered from the Great East Japan Earthquake and tsunami that struck on March 11 last year.
“I cannot go along with a major tax hike from the standpoint of economic policy as well as the standpoint of the actual economy," Ozawa said. "I cannot support a major tax hike and I believe that is the feeling of a majority of the public.
“There are things that have to be done before a major tax hike--and that is the responsibility that had been placed on the DPJ."
Noda explained that his government has made efforts in administrative and civil service reform. "We are putting greater emphasis on social security,” he told Ozawa. “We are also making our best efforts to turn the economy around."
But Ozawa would not budge.
"That may be the case when a comparison is made to what the Liberal Democratic Party might have done, but our policy arguments are much bolder," Ozawa said.
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