Minshuto cool to coalition road-tax reform

The ruling coalition today will offer adjustments to road-specific taxes to break the Diet deadlock over the fiscal 2008 budget, but the main opposition party has already scoffed at the proposal.

The Liberal Democratic Party and junior coalition partner New Komeito agreed Wednesday on the outline of the proposal that would shift revenue from higher rates on gasoline and other road-specific taxes to the general-account budget in fiscal 2009 at the earliest.

The government would also review its much-criticized plan to spend up to 59 trillion yen over the coming 10 years on road network improvement, including construction of expressways that are expected to lose money.

However, the precondition to the proposal is that the opposition side pass budget-related bills for fiscal 2008 by the end of March without any revisions.

In addition, the coalition's proposal will not include the elimination of "temporary" higher rates for road-specific taxes or numerical targets for reviewing the 59-trillion-yen midterm road-improvement plan.

One of the bills includes a 10-year extension of the higher tax rates, whose revenue has been earmarked specifically for road construction.

Minshuto (Democratic Party of Japan) has demanded the abolition of those provisional rates.

"There is no possibility that we will make concessions over the issue (of provisional tax rates) on which our political philosophy and views are fundamentally different (from those of the ruling coalition)," Minshuto Secretary-General Yukio Hatoyama told a news conference Wednesday.

Prime Minister Yasuo Fukuda told reporters that the issue of provisional tax rates could be on the table for discussions on fundamental tax system reform.

He also said talks would include conversion of all road-specific taxes into revenues for general spending.

The coalition expects the proposal to pave the way for the opposition-controlled Upper House to pass budget-related bills before the start of the fiscal 2008 on April 1.

The budget bill itself will be passed before April in accordance with stipulations of the Constitution--even if the Upper House rejects it or does not act on it. But other bills necessary to implement the budget require approval of the upper chamber.

The opposition camp refused to discuss the budget and budget-related bills in the Upper House until March 12 because the ruling coalition forced the bills through the Lower House on Feb. 29.

The ruling coalition is also considering asking Lower House Speaker Yohei Kono and Upper House President Satsuki Eda to present a new compromise proposal next week, sources said.

In their first compromise proposal on Jan. 30, Kono and Eda called for accelerating Diet debate on the budget and budget-related bills so that a conclusion could be reached before March 31.

The proposal helped end the standoff between the ruling and opposition camps over the coalition's attempt to legislate a stopgap bill to extend the higher gasoline tax rate by two months beyond March 31.(IHT/Asahi: March 21,2008)