LDP lawmakers also bickering over consumption tax hike

With Prime Minister Yoshihiko Noda now cozying up to the opposition bloc, ruling party heavyweight Ichiro Ozawa may seem like the odd man out.

But Ozawa and his supporters were unfazed after Noda announced his new tactic of seeking cooperation from the main opposition Liberal Democratic Party to pass legislation to increase the consumption tax rate.

"They will never be able to conclude talks to amend the legislation," one of Ozawa’s associates said.

While much has been made about the possibility of Ozawa and his group bolting the ruling Democratic Party of Japan to protest Noda’s proposed tax hike, the LDP is also showing signs of a potential split over the issue.

Many LDP members are uneasy with the idea of supporting an unpopular tax policy that could hurt their chances come election time. Others are against LDP President Sadakazu Tanigaki’s tireless demand for Noda to dissolve the Lower House for a snap election in exchange for votes in favor of the tax hike.

Noda on June 3 tried again to win over Ozawa on the tax bill.

After Ozawa withheld his support, Noda said he would intensify efforts to hold discussions with the LDP on doubling the consumption tax rate to 10 percent by 2015.

Ozawa calmly responded, "Because holding discussions with the opposition is the natural thing to do, I understand what you are trying to do."

It was clear that Noda’s Cabinet reshuffle the following day was intended to appease the LDP.

Noda conceded to the LDP’s demands that two Cabinet ministers—Defense Minister Naoki Tanaka and land minister Takeshi Maeda--be replaced as a condition for the party’s participation in Diet deliberations on the tax legislation. The Upper House, controlled by the LDP and other opposition parties, had passed censure motions against Tanaka and Maeda.

However, Tanigaki is demanding more.

The LDP chief also wants Noda’s government to accept in whole the LDP proposal on reforming the social security system.

Underscoring Tanigaki’s firm stance on the social security proposal, an LDP executive on June 3 warned the DPJ not to waste any time.

"If discussions to amend legislation, including on the social security system, are conducted with all parties, that would just be a stalling tactic and the LDP would not participate," the executive said.

Tanigaki also shows no signs of wavering from his demands for Noda to dissolve the Lower House for an election.

LDP Vice President Tadamori Oshima told another party executive that he would talk with Deputy Prime Minister Katsuya Okada and Chief Cabinet Secretary Osamu Fujimura about securing a guarantee for a Lower House dissolution in exchange for LDP support for the tax hike.

But a number of influential politicians within the LDP have made clear their opposition to Tanigaki's strategy.

Former Prime Minister Yoshiro Mori questioned Tanigaki's insistence on seeking a Lower House dissolution since an election would have to be held anyway when lawmakers’ terms expire in September 2013.

Makoto Koga, a former LDP secretary-general, said, "It is the role of politicians to cooperate when the need arises by never forgetting about the nation and the people."

A number of veteran LDP politicians feel the party’s best strategy would be to force negative connotations of the tax hike on the DPJ-led government while pushing social security proposals that could gain the LDP more votes in the next election.

If the Noda administration continues seeking agreements with these LDP veterans, the split could widen between those lawmakers and Tanigaki and his deputies.

In fact, Okada has been holding informal talks with Mori about gaining LDP cooperation in passing the consumption tax legislation.

"There is a division within the LDP as well,” a former Cabinet minister in the DPJ said. “Tanigaki will not be able to continue with his strategy for much longer."

Even Okada has indicated that a Lower House vote on the tax bill would not be pushed if discussions with the LDP are unproductive.

Ozawa and his allies are counting on the Noda administration and the LDP failing to agree on the tax proposal.

If the legislation is not brought up for a vote in the Diet, Ozawa and his group would not have to openly oppose it.

However, Noda has repeatedly said he was staking his political life on passing the legislation. And he recently showed he is capable of ignoring the concerns of DPJ Secretary-General Azuma Koshiishi, an Ozawa ally.

Koshiishi was opposed to reshuffling the Cabinet. But Noda did so anyway. And although Koshiishi arranged the second meeting on June 3 between Noda and Ozawa, the prime minister did not offer any compromises and simply informed Ozawa that he would strengthen efforts to seek cooperation from the LDP.

If Noda should somehow reach a deal with the LDP and put the consumption tax legislation to a vote before the Diet, Ozawa and his group would be isolated in the political world.

And if Ozawa and his group voted against the legislation, they would likely be expelled from the ruling party, shattering Ozawa's strategy of recovering his influence through a successful DPJ presidential campaign in autumn.