August,13,2012

Response to passing of law to raise consumption tax

On August 10, the House of Councillors passed a law to raise the national consumption tax. The Happiness Realization Party maintains its stance that it is an extremely imprudent measure to raise consumption tax while the economy continues to suffer from prolonged deflation, and therefore strongly condemns the passing of this law. It is possible that there will be a temporary upsurge in demand during the time before the tax increase, and on the surface it may appear that the economy is improving. After the tax hike, however, consumer spending will inevitably stall, and as a result, domestic demand will decline, and Japan will become economically bankrupt. Prime Minister Noda says that he is staking his political career on the success of this law, but recently short-lived administrations have become the norm, and it is highly unlikely that he intends to take responsibility for the economic and fiscal condition of Japan two to three years in the future.

It seems that this consumption tax increase is partly aimed at doing away with the perception that the government is indecisive, but it is preposterous to implement misguided policies simply in order to show that politics can achieve decisions. Some say that the tax hike is necessary because Japan’s financial situation is at a crisis level on par with that of Greece and so forth, yet most of Japan’s government debt is domestically owned, and Japan’s long-term interest rate is at nearly the lowest level among the major industrialized nations. Also, taking into consideration the fact that Japan is the world’s biggest creditor nation, it is clear that declarations that the country is facing a financial crisis are no more than arguments aimed at justifying tax increases.

If Japan truly wants to restructure the economy, rather than increasing taxes, which will bring about an economic downturn, the country must reduce the ratio of debt to GDP based on a high level of economic growth. Therefore, Japan must ease the money supply in order to overcome deflation, while significantly reducing corporate and other taxes and carrying out an effective growth strategy.

The conflict between the ruling and opposition parties concerning the law to raise consumption tax and the dissolution of the House of Representatives cooled as the result of a decision made at a meeting of the leaders of the Democratic Party of Japan, Liberal Democratic Party, and New Komeito Party on August 8 to seek a public mandate after the law had been passed. Nevertheless, the three parties had likely already agreed to adopt the law during the current Diet session. Despite the fact that the Liberal Democratic Party sought early dissolution based on partisan interests and indicated that it would go against the three party consensus, it ultimately changed its position and agreed to adopt the law. The fact that this recent conflict became public shows that the Democratic Party of Japan and the Liberal Democratic Party, which is looking to return to power, are lacking responsibility. This is apparent not only based on their policy of raising taxes, but also their indifference to the wishes of voters.

In response to the consensus, various speculations have arisen regarding the timing of a snap general election, and an early election will be needed in order to replace the Democratic Party of Japan. Prior to this, however, reforms to the electoral system of the House of Representatives, which remains unconstitutional due to a disparity in the value of votes, must be completed. Factoring in the reduction of the number of seats, changes to electoral zoning, and time required for notifying the public, it will take several months to correct the disparity. Initiating a general election without fixing the constitutional infringements would entail putting politics before the constitution, and such an action by the highest institution of sovereignty and legislative branch of the government would be absolutely unacceptable. If the Diet members ignore their obligation to uphold the Constitution and allow this unconstitutional situation to continue, it will inevitably remain as one of the lowest points in the history of constitutional politics.

The current political situation has once again demonstrated the negative effects of a bicameral system. Although there was talk of withdrawing the law to raise consumption tax, ultimately it was not possible to override the decision that had been debated in the House. The House of Councillors has changed from a “house of good sense” to a “house of politics” and established itself as simply an institution of confirmation for the House of Representatives. The divided Diet, in which the majorities differ in the House of Representatives and House of Councillors, has brought about nothing but delays to the progress of national politics. The Happiness Realization Party stands by its statement that the House of Councillors should be abolished. The Diet should be reformed into a unicameral system, and decision-making should be accelerated based on the national interest.

While two main political parties are making decisions that will bring about the “sinking of Japan,” the Happiness Realization Party intends to help “revive Japan” and take bold actions. To this end, we ask for your continued support.

Shugaku Tsuiki
Party Leader
Happiness Realization Party