Wednesday, January 30, 2008

Gasoline Tax Surcharge Update with Ozawa Chaser

In a neat ideological split of newspaper editorials, Asahi and Mainichi oppose the two month-extension bill for tax measures that are scheduled to expire after March 31, while Yomiuri and Sankei support the stop-gap bill. However, look at their positions on the underlying issues with regard to the gasoline taxes*:

Asahi: put gasoline tax revenues into general budget, consider maintaining surcharge as environment tax
Mainichi: put gasoline tax revenues into general budget (negative reference to 10-year road construction plan), consider maintaining surcharge as environment tax
Yomiuri: put gasoline taxes revenues into general budget, maintain surcharge*
Sankei: rethink road construction plan and the dedication of gasoline tax revenues thereto

It looks like there’s a pretty good consensus that the 10-year, 59-trillion-yen road construction plan is excessive and that a good way of getting the reform that Prime Minister Koizumi left unfinished back on track is to put the tax revenue from auto fuels into the general budget and by implication making it harder for the construction lobby and the LDP construction tribe to get their hands on that money. Other than Sankei, the newspaper of record for economic conservatives, they all appear to be resigned to taxing auto fuel over and above the “normal”, i.e. sans surcharge, rate.

The DPJ position under which it won the July election is not inconsistent with this consensus. No, its policy manifest did not explicitly mention gasoline taxes ***, but the manifest did advocate the abolition of all special budgets, and one of the consequences of this is that legally dedicated sources of tax revenue would disappear. There was no indication with regard to the tax rate or its name, so it could have gone any which way on it.

Unfortunately, under Mr. Ozawa, they’ve been busy outdoing the LDP at the bribe-them-with-their-own-money game, and the gasoline tax surcharge has not been spared. But they could, in the context of an environment surtax that goes into the general budget (with some of it no doubt going back to roads), peddle back without completely abandoning their stand on the surcharge. This is but one element that will surely be considered in the search for a compromise - a three-year timeout is my pet idea*** - once the dust settles and the DOJ goes back to work with the backing of the mainstream media, and holds the coalition accountable for its non-transparent road construction plan and more broadly its erosion of this key item of the Koizumi reform.

Right now, the DPJ is using brute force to make a spectacle of the parliamentary process, but that is so Showa Era, a game plan more befitting a “ten-thousand-year opposition party”. It must come to its senses soon, get to work, and bring the debate back to the underlying issues that it only hinted at in its policy manifest. If nothing else, it already has promised too much on too many issues; it does not need yet another thirteen-digit check to make good on in the unlikely event that it takes over after the next Lower House election.And it will have the mainstream media’s support. And the coalition will bend to placate public opinion, if its overtures during the failed talks with regard to the temporary extension bill are any indication. Besides, itthe DPJ needs to keep Yasuhiro Oé and his surtax-friendly DPJ friends onside***, and this is a good way to do it.

* There are other tax measures at stake, though they are irrelevant to this post. If you’re new here and are interested, please read this. The first three sets of items listed there have been submitted as one tax bill per set.

** See January 24 editorial.

*** I went over this point in this post.

No comments: