Political tension rises in Japan
over gas tax By Hisane Masaki
TOKYO - Political tension is heating up in
Japan over whether to extend the temporary higher
rate for the gasoline tax, amid spikes in oil
prices and growing concerns about global warming.
Prime Minister Yasuo Fukuda's Liberal
Democratic Party-led ruling coalition wants to
retain the temporary higher rate, for fear of
losing tax revenues needed for road-related
projects, especially in rural areas, amid dire
fiscal straits. Meanwhile the biggest opposition
Democratic Party of Japan (DPJ) demands the
abolition of the temporary rate at a time when
soaring prices for gasoline and other fuels are
hitting consumers.
As of January 21, the
retail price for regular gasoline averaged
153.3 yen (US$1.4) per liter
across the country, according to the Oil
Information Center, affiliated with the
government-backed Institute of Energy Economics,
Japan. While an expiration of the temporary higher
gasoline tax rate could lead to a decline of 25
yen in the gasoline price per liter, the amount of
tax revenues lost would also be huge.
Although they are described as
"temporary", the higher rate for the gasoline tax
has been in place for more than three decades.
Lowering the temporary increased rates for
gasoline and other road-related taxes is expected
to reduce tax revenues by a total of about 2.6
trillion yen - 1.7 trillion yen for the central
government and 900 billion yen for local
governments, according to the official figures.
While expressing concerns about a possible
sudden revenue shortfall, the government also
argues that Japan will suffer diplomatically by
sending a wrong message to the international
community about its commitment to fighting global
warming if the higher gasoline tax rate is
scrapped, especially at a time when the nation is
preparing to host this year’s summit of the Group
of Eight (G8) major countries.
Top leaders
from the G8 countries - the United States, Canada,
Britain, Germany, France, Italy, Russia and Japan
- are to get together in the Lake Toya resort in
the northernmost Japanese prefecture of Hokkaido
in early July. Climate change is expected to top
the summit agenda. Japan also plans to invite
leaders from such emerging economic powers as
China and India.
The government estimates
that if the temporary higher rates for both the
gasoline and light oil delivery taxes are
scrapped, use of automobiles will increase,
resulting in a rise in carbon dioxide (CO2)
emissions of 24 million tons a year, or about 1.9%
of the nation’s annual emissions, Japan's Jiji
Press news agency reported on January 18.
'Gasoline Diet' in full
swing The gasoline tax has emerged as the
biggest issue in the ordinary parliamentary
session that convened last Friday, as the
temporary hikes in gasoline and other road-related
tax rates are to expire at the end of March. The
DPJ-led opposition camp controls the Upper House
of the bicameral Parliament, or the Diet, although
the coalition led by the Liberal Democratic Party
(LDP) holds a two-thirds majority in the more
powerful lower house.
With a formidable
opposition force, declining poll ratings and a
possible general election for the Lower House this
year, Fukuda, who concurrently serves as LDP
president, has consistently faced the daunting
challenge of pushing through his agenda since
taking office last September, succeeding Shinzo
Abe.
The ruling LDP-New Komeito coalition
lost control of the 242-seat House of Councilors,
or the Upper House, to the DPJ-led opposition in
an election last July. To be sure, the ruling camp
retains more than two-thirds of 480 seats in the
House of Representatives, or the Lower House,
whose decisions constitutionally take precedence
over those of the Upper House regarding budget and
treaties as well as the election of a prime
minister. But it has faced significant
difficulties in pushing through its legislative
agendas since it lost its majority in the Upper
House.
In a policy speech delivered last
Friday to launch the 150-day ordinary Diet
session, Fukuda stressed the need to retain the
hikes in the gasoline and other road-related taxes
in order to maintain and repair roads, secure good
access to emergency hospitals and take measures
against urban traffic congestion.
In the
speech, the 71-year-old premier also emphasized
the need for Japan, as host to the July G8 summit
in Hokkaido, to play a leading role in global
environmental issues. He vowed to turn Japan into
a "low-carbon society" and stressed the importance
of developing innovative technologies to combat
global warming. The premier also said that Japan
must first achieve the Kyoto Protocol goal of
slashing its annual greenhouse gas (GHG) emissions
by 6% of its 1990 level on average between 2008
and 2012.
Meanwhile, the DPJ is digging in
its heels in the showdown over the gasoline tax
issue. Dubbing the current ordinary Diet session
the "Gasoline Diet", the opposition party looks
firmly determined to drive the Fukuda
administration into a corner. DPJ leader Ichiro
Ozawa said at a party convention on January 16,
"Now, when price hikes in gasoline and kerosene
are directly affecting people's lives, we will
work in the Diet to abolish the temporary higher
rate for the gasoline tax and show the results to
the public. We have to accomplish a price decrease
of 25 yen per liter," he said.
During Diet
interpellations on Monday, DPJ secretary general
Yukio Hatoyama also strongly demanded the
provisional rate of the gasoline tax be
eliminated, saying it had been introduced 34 years
ago and now works on behalf of a number of vested
interests. But LDP secretary general Bunmei Ibuki
lambasted the DPJ during the same Diet session,
saying the biggest opposition party does not have
a clear plan to compensate for a shortfall in tax
revenue for the central and local governments that
would result from the abolition of the provisional
higher gasoline tax rate.
A government
bill to extend the temporary higher rates for
gasoline and other road-related taxes was
submitted to the current Diet session on
Wednesday. If the bill fails to pass Parliament
before the end of March, the temporary higher tax
rates will expire. The ruling camp wants to
maintain the provisionally higher tax rates for
another 10 years, while the DPJ seeks to lower the
tax rates to their original levels.
Finance Minister Fukushiro Nukaga warned
on Wednesday that if the bill fails to clear the
Diet by the end of March, it will cause "serious
negative effects on people's lives".
In
addition to the gasoline and other road-related
taxes, the tax reform bill includes measures that
the DPJ feels will be difficult to oppose, such as
tax relief measures for small and mid-size
businesses. In a strategy aimed at putting
pressure on the DPJ, the government and ruling
coalition defied the DPJ demand that a bill to
maintain the temporary higher gasoline tax rate be
submitted separately from the tax reform bill.
Round 2 in political battle Even
if the opposition-controlled Upper House votes
down the bill, the ruling coalition-dominated
Lower House can override the decision on the
strength of the LDP-led coalition's two-thirds
majority.
Under Article 59 of the
constitution, a bill can be sent back to the Lower
House for a second vote if the Upper House votes
it down or holds off on taking a vote on it within
60 days of receiving it. The bill will become law
if passed in the second vote with the support of a
two-thirds majority.
The ruling camp used
the rarely implemented constitutional power in the
extraordinary Diet session that closed on January
15 to enact a controversial bill to resume Japan's
refueling mission in the Indian Ocean in support
of the United States-led anti-terrorism operations
in Afghanistan.
To actually resume the
refueling mission, which has been suspended since
November 1 of last year, as early as mid-February,
a Japanese Maritime Self-Defense Force (MSDF)
destroyer left on Thursday for the Indian Ocean
and an MSDF support vessel is also scheduled to
depart on Friday.
But if the opposition
camp drags its feet and refuses to agree on
putting the tax bill to a vote in the Upper House
by the end of March, the temporary higher gasoline
and other tax rates will be scrapped, at least
temporarily.
By taking advantage of the
gasoline issue, the DPJ, emboldened by opinion
polls showing that a majority of Japanese people
favor the abolition of the provisional higher
gasoline tax rate, hopes to eventually force
Fukuda to dissolve the Lower House and call a snap
election.
The DPJ threatens to submit a
censure motion against Fukuda if the ruling
coalition tries to railroad through the bill to
maintain the provisional higher gasoline tax rate.
"Should the ruling camp make light of us again
during the ordinary Diet session, we are prepared
even to submit [to the Upper House] a censure
motion against the prime minister," the DPJ's
Upper House leader Azuma Koshiishi said on
Tuesday.
Such a censure motion in the
Upper House would be non-binding, unlike a
no-confidence motion in the Lower House. Still,
the possibility of a censure motion against Fukuda
in the Upper House leading to the prime minister's
dissolution of the Lower House for a general
election cannot be ruled out. Fukuda himself has
strongly indicated his intention to hold off
dissolving the Lower House for a general election
at least until after the G8 summit in Hokkaido in
early July.
The situation will almost
certainly get worse for the ruling coalition. Even
if it manages to keep power in the next general
election, it will most likely lose the power to
resort to the legislative procedure permitted
under Article 59 of the constitution. The LDP and
New Komeito, a party backed by lay Buddhist
organization Soka Gakkai, will most likely lose a
two-thirds majority in the Lower House, which it
gained by scoring a landslide victory in the last
general election, held in September 2005 under the
highly popular then-prime minister Junichiro
Koizumi.
Environmental
credentials Chief cabinet secretary
Nobutaka Machimura, the top government spokesman,
said at a press conference on January 17 that if
the gasoline tax rate is lowered, foreign
countries will doubt Japan's seriousness about
tackling environmental issues.
Echoing
Machimura's view, Foreign Minister Masahiko Komura
also said at a press conference last Saturday that
if Japan takes steps that would encourage gasoline
consumption, such as lowering the gasoline tax
rate, it will not be able to take the leadership
role in international anti-global warming efforts.
It would be fair to note, however, that
the DPJ is not anti-environment at all. As a
matter of fact, the DPJ is pursuing more
aggressive goals than the government and the
ruling coalition to combat climate change.
The DPJ is preparing to submit to the
current Diet session a comprehensive anti-global
warming bill that would, among other things, set
medium- and long-term national GHG reduction goals
and create a "cap-and-trade" mandatory GHG
emissions trading system in the nation, similar to
one in place in the European Union.
The
DPJ decided last May to pursue the goal of
slashing emissions of CO2 and other GHGs blamed
for global warming by 20% by 2020, compared with
the 1990 level. But the party is considering
incorporating a tougher national GHG-reduction
goal in the comprehensive anti-global warming
bill. The DPJ also calls for the introduction of
an "anti-global warming measure tax" in the future
to replace the gasoline and other taxes with
provisionally higher rates.
Amid vehement
political pressure from Japan's industries, the
government and the ruling coalition have so far
shied away from setting any medium-term national
GHG-reduction target. Government ministries are
also in disarray over whether to introduce a
mandatory GHG emissions trading system and an
environment tax, levied primarily on fossil fuels
such as oil, gas and coal. The Japan Business
Federation (Nippon Keidanren), the nation's most
powerful business lobby, remains adamantly opposed
to both of these measures as well.
Despite
its firm commitment to the Kyoto Protocol goal of
cutting GHG emissions by 6%, Japan saw its
emissions rise 6.4% in fiscal 2006, which ended in
March 2007, from fiscal 1990, according to
preliminary government figures.
As the
nation is struggling to reach its Kyoto goal,
environment groups are clamoring for the
introduction of a mandatory emissions trading
scheme and an environment tax, as well as the
setting of a medium-term national emissions
reduction target. International negotiations are
under way on a new pact to replace the Kyoto
Protocol, which expires in 2012.
Hisane Masaki is a Tokyo-based
journalist, commentator and scholar on
international politics and economy. Masaki's
e-mail address is yiu45535@nifty.com
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