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Prime Minister calls for unity on economic issues

Date Posted: 2010-06-16

Prime Minister Naoto Kan is under fire from both his own Democratic Party of Japan and the opposition camp over a variety of matters, including finding ways to fix the nation’s economic policies and programs.

The new Prime Minister is finding consensus difficult to find despite appealing to the Liberal Democratic Party and his colleagues in the DJP on financial issues, not to mention his decision to let the Diet session end Wednesday as scheduled despite a proposal Monday to extend it by one day. Kan also continues to be pummeled over his decision to stand by a controversial and unpopular agreement made by his predecessor, Yukio Hatoyama, to keep Futenma Marine Corps Air Station in Okinawa.

Kan has asked the LDP to back his proposals for creation of a joint panel to study Japan’s financial situation and come up with solutions. Sadakazu Tanigaki, President of the LDP, told Kan he’d agree, so long as the DPJ drop controversial hand-out policies including child allowances. Kan is pressing for fiscal discipline as he tries to curb the government’s debt, going so far as to suggest a consumption tax increase.

Tanigaki, while showing signs of cooperation on economic issues, attacked Kan for his position on Futenma. “Mr. Kan has pinned all the blame on Mr. Hatoyama and deliberately kept his mouth shut on the issue,” the LDP leader said referring to Kan’s failure to speak out and take a position on Futenma while Finance Minister. He also criticized Kan over allowing the Diet to end on schedule, saying “The DJP is acting on partisan interests, trying to head into the Upper House election on July 11th without properly reviewing the previous administration’s failures.”

Kan has apologized for backing off promises to enact a postal reform bill, saying he’ll do it during the next extraordinary Diet session. That bill had been supported by Kokumin Shinto, the People’s New Party, the DJP’s coalition partner. Financial Services Minister Shizuka Kamei resigned from his post only a week into Kan’s administration over the DPJ’s failure to act on the bill he strongly supported. “A promise has been broken,” he said, adding “I am responsible for not being able to persuade Kan” to submit the bill.

As the new administration consolidates its positions, it faces serious situations as it attempts to fix Japan’s fiscal policies. “It is desirable to change the taxation structure to produce new revenues sources and use it for economic growth,” Kan says, hinting that he’s got an increase in the consumption tax rate in the near future. Many of Kan’s ministers have spoken out in support of a consumption tax rate increase. Former Prime Minister Yukio Hatoyama had been staunchly opposed to any increase while he was in office. The LDP has signaled plans to propose raising the consumption tax rate to 10%.

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