Friday, September 29, 2006

Mr. Yosano (and Mr. Machimura as well?) Get the Chance to Raise Our Taxes

It appears that Kaoru Yosano is not going to be completely left out in the cold after all. All news reports say he has been tapped to chair the LDP Research Commission on the Tax System. Nobutaka Machimura, according to at least one report, is reassuming his old post as his deputy there.

The Commission is not as powerful as it used to be when the colorful Yamanaka Teisoku lorded over the annual revision of the tax code, and in the process could make or break every major policy initiative, MOF and non-MOF. But it's still quite a powerful perch on which to wait and see if Prime Minister Abe falters and the powers-that-be come looking for an alternative.

From a policy perspective, just as important is the fact that Mr. Yosano (and Mr. Machimura as well, if the report of his return is to be believed) will be perfectly positioned to push his agenda of raising the consumption tax to pay for rising public pension and health costs.

This opportunity can be a mixed blessing. Raising taxes is never a popular cause, as the LDP's losses in the 1989 Upper House and 1990 Lower House elections after the introduction of the consumption tax demonstrate. (And look where speaking up on raising the consumption tax got Sadakazu Tanigaki.)

But that was then. Most people today are resigned to the prospects that the consumption tax will go up, and recognize that the social welfare system will run out of money. Thus, if the LDP loses badly in the 2007 Upper House elections and feels the need for a grand coalition to rule effectively, Mr. Yosano will have the perfect issue on which to renew his acquaintances with another old warhorse, Ichiro Ozawa.






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