Fukuda seeks passage of 2 conflicting tax bills

A day after getting trounced in a by-election, the leaders of the two coalition parties on Monday agreed to outline a bill this year allowing the use of road-related tax revenues for general purposes from fiscal 2009.

Prime Minister Yasuo Fukuda, who is president of the Liberal Democratic Party, and Akihiro Ota, chief of junior coalition partner New Komeito, said the two parties will set up a council to implement revised road-related policies and wide-ranging tax reforms from fiscal 2009.

However, the two leaders also confirmed plans to railroad a bill through the Lower House on Wednesday to reinstate higher gasoline and other road-related tax rates that expired at the end of March.

In a document, they cited the need to end confusion in the fiscal conditions of local governments and the lives of the public as early as possible.

But in an apparently conflicting move, Fukuda and Ota also agreed to seek the earliest Diet passage of a bill designed to have the gas and other road-related tax revenues used exclusively for road projects over the next decade.

Using the so-called 60-day rule, the ruling coalition plans to ram through this bill on May 12 or after through a second vote in the Lower House.

Ichiro Ozawa, leader of opposition Minshuto (Democratic Party of Japan), said Minshuto will decide whether it will submit a censure motion against Fukuda to the Upper House after watching the coalition's decision on the road-specific tax bill in May.

Minshuto was initially considering submitting a censure motion after the coalition's re-vote on the gas tax rate on Wednesday.

Ozawa also said the road-tax bill contradicts Fukuda's proposal to convert road-specific taxes into general revenue from fiscal 2009.

Fukuda and Ota agreed to draft and submit a bill to free up road-specific tax revenues because the road-tax bill has been criticized not only by the opposition parties but also by the LDP's mid-tier and young lawmakers as contradicting Fukuda's initiative.

LDP leaders feared that sticking to the bill could refuel criticism within the party in the aftermath of the loss in Sunday's by-election.

Criticism by the public and the opposition parties over the coalition's strong-armed tactics to resume the higher gas tax rate is considered one reason why the LDP lost in the Lower House by-election in Yamaguchi Prefecture on Sunday. Hideo Hiraoka, the Minshuto candidate, crushed his LDP rival, Shigetaro Yamamoto, in the vote.

Chief Cabinet Secretary Nobutaka Machimura expressed confidence during a news conference Monday that criticism would wane over the move in the Lower House that will increase gas prices.

"We are going to give a full explanation (on why the higher tax rates are necessary)," Machimura said. "We will gain the understanding of the public for reviving the higher tax rates." (IHT/Asahi: April 29,2008)