The Lower House on June 26 passed bills to double the consumption tax rate, setting the stage for a mass defection from the ruling Democratic Party of Japan.
In the chamber’s plenary session, 363 lawmakers voted in favor and 96 opposed over the issue that has been at the center of a fierce political battle since Prime Minister Yoshihiko Noda took over the nation’s top post in autumn last year.
Fifty-seven ruling party members, many of whom belong to groups led by former DPJ President Ichiro Ozawa and former Prime Minister Yukio Hatoyama, voted against the legislation. Sixteen DPJ lawmakers abstained from voting.
At a news conference after the Diet vote, Noda said he would discuss disciplinary measures against those who voted against the legislation with Secretary-General Azuma Koshiishi. While stopping short of going into specific measures he had in mind against the party rebels, Noda said, "We will deal with the matter in a strict manner."
He added that each individual case would have to be evaluated before a disciplinary measure could be imposed, but said that did not mean the process would be a drawn-out affair.
Noda also denied any intention of dissolving the Lower House and calling a snap election.
Noda and the DPJ leadership had ensured passage of the bill through agreements and compromises with the main opposition Liberal Democratic Party and New Komeito.
The legislation will raise the consumption tax rate to 8 percent in April 2014 and 10 percent in October 2015.
It was the first time in 18 years that the Lower House passed a bill to increase the consumption tax.
Noda repeatedly said he was staking his political life on passing the tax hike legislation. He said the increase was needed to deal with Japan’s enormous debt problem and prevent the nation from falling into a fiscal crisis like those seen in European countries.
Ozawa, who leads the largest group in the DPJ, said the tax hike would derail Japan’s fragile economic recovery and break the DPJ’s promise in its manifesto for the 2009 Lower House election, which brought the party to power.
He has indicated he might bolt from the DPJ and form a new party.
At a news conference after meeting with group members, Ozawa indicated he would first hold discussions with DPJ executives before making a decision on leaving the party and forming a new one.
"The best measure will be to return to the starting point of the arguments that the DPJ made to the public," Ozawa said. "While the actual possibility is very small since it pushed ahead with the tax hike legislation, I will call on the government and party leadership to revert back to the true nature of the DPJ."
He added that group members had entrusted him with the final say on the future course they would all take.
Noda miscalculated the number of DPJ lawmakers willing to defy his wishes and vote against the consumption tax bills.
Aides to Noda initially said fewer than 40 party lawmakers would follow Ozawa and oppose the legislation. But reports surfaced on June 21 that Ozawa had obtained letters from about 50 lawmakers who said they were prepared to resign from the party over the issue.
Those close to Noda feared that a decision by DPJ executives to expel the defiant lawmakers could accelerate their exodus, depriving the DPJ of its Lower House majority and putting the Noda administration at risk of having a no-confidence motion passed against it in the Diet chamber.
The prime minister’s aides suggested weaker disciplinary measures against members who voted against the consumption tax bills. But those suggestions actually increased the number of lawmakers who expressed opposition to the legislation but stopped short of saying they would leave the party.
The next stage for the Noda administration is in the Upper House, which is controlled by the opposition bloc. Deliberations there could focus on the large number of DPJ Lower House members who voted against the tax hike bills.
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