With all signs on the BOJ appointments trending to an eventual someone-other-than-Mutō denouement, it’s time to turn my attention back to the gasoline taxes and the road construction budget. (It’s also time to revisit the public pension scandal as the Abe-imposed March deadline for finding the owners of the missing account approaches; but one at a time.)
As I indicated here, I now believe that the DPJ is now gearing up to speed right past the March 31 deadline and let the gasoline tax surcharge lapse. The LDP is surely going to keep sending out feelers to the DPJ leadership while stepping up its lobbying efforts (in cooperation with local government officials and special interests) aimed at the 39 DPJ Diet members (including 25 from the Upper House) who reportedly signed Yasuhiro Ōe’s petition opposing the elimination of the surcharge, and other potential dissenters among the DPJ rank-and-file. The DPJ took a net five-member hit on the BOJ Governor vote in the Upper House (two absented themselves and three abstained, the latter including the rambunctious Mr. Ōe) but none of its members actually voted in favor of Mr. Mutō. However, pressure will be much stronger － from both sides, to be sure － on the gasoline taxes. Further complicating the picture will be the internal dissent on the LDP side.
Assuming that the standoff continues into the new fiscal year, the DPJ has several options. It could stonewall all attempts at reconciliation and keep the gasoline taxes from coming to an Upper House vote past the 60-day limit. It will be hard for the DPJ to maintain credibility with the media if that happens unless new, major scandals involving the road construction money are revealed. Still, the possibility cannot be ruled out, since it just may have to do so to avoid defections. In the event, the LDP-New Kōmeitō coalition will have no choice but to exercise its supermajority in the Lower House to pass the relevant tax bill in its current form, since any amendments made in the Lower House without the consent of the DPJ will have to go back to the Upper House with a new 60-day game clock. The coalition will likely feel compelled to attach a Lower House resolution or something of the sort to the effect that it intends to make the non-partisan reexamination of the issue the top priority item during the next Diet session, if not sooner. Otherwise, the opposition (and the media) will have a field day in excoriating the coalition for enacting a flat ten-year extension. The immediate consequence of this turn of events is a one-month hiatus resulting in a loss of about 200 billion yen or 4% out of the annual gasoline tax revenue. I don't see a major problem fiscally or legally.
A simple Upper House rejection would have more or less the same conclusion, the difference being a few days worth of revenue recovered as the result of an earlier Lower House revote.
The DPJ, with the cooperation of at least parts of the opposition, can also amend the bill in the Upper House and let it pass as amended. In this case, the two Houses must go into a huddle. If the DPJ comes up with an amendment that looks credible to the media (something between the current positions of the two sides) and says, "my way or your way," the coalition will look at the public opinion polls and probably see that it has a very painful decision to make: swallow the amendment whole and let the DPJ take credit for the compromise, or go for the original and take the political hit.
One long-term outcome of all this will be a greater willingness to buck party leadership on individual issues and a corresponding reluctance on the part of the party leaderships to discipline their respective members. The dissent will usually take the form of absence or abstention, though outright defiance cannot be ruled out. All this has happened before. The main difference between then and now is that there is now a credible opposition spanning broadly similar political tendencies as the coalition. This means that both sides are more susceptible to poaching but less so to splintering. Accordingly, the leadership will want to avoid situations that allow dissent to surface, and treat it more leniently when it does.