Latest news with #minority government
Japan Times
3 days ago
- Business
- Japan Times
Consumption tax cut not a given even after Upper House election
A consumption tax cut that was such a pivotal issue in Sunday's Upper House election is not a foregone conclusion given the political realities of a minority government and the economic realities of Japan, some analysts say. In the historic vote, the Liberal Democratic Party-Komeito coalition lost its majority and now controls neither house of parliament, although it still has the Cabinet. It has stood firmly against lowering the consumption tax — which is currently set at 10% for most items and 8% for food and beverages — while most opposition parties have called for a reduction of the tax or simply abolishing it. The problem for the opposition parties is that they might not be able to agree on enough to be effective against a coalition that remains the largest bloc in both houses despite lacking a majority. 'It's probably quite difficult for them to find common ground,' Tomohisa Ishikawa, chief economist at the Japan Research Institute, said of the opposition. Markets may also make consumption tax cuts difficult. Investors were already rattled ahead of the election, in part on the possibility that government revenues could take a hit with the implementation of policies pushed by the opposition. The yield on 30-year Japanese government bonds surged to a record 3.2% last week, and that on 20-year JGBs hit the highest level since November 1999. Bond prices move inversely to yields. "I believe the recent rise in the yield on superlong-term bonds was a sign that Japan's fiscal risks were being taken more seriously,' said Daiju Aoki, regional chief investment officer at UBS SuMi Trust Wealth Management. Prime Minister Shigeru Ishiba stood firm on his stance against the tax cuts right up through election day on concerns about the fiscal stability of the country. 'If we were to implement such a policy, how would we secure funding for social welfare programs?' he said Sunday. While pressure on the government to spend more will undoubtedly increase post-election, Aoki said a tax cut may be implemented in a way that won't seriously hurt fiscal soundness. 'By teaming up with parties against a massive government bond issuance, the LDP and Komeito can still form a majority,' he said. Virtually all opposition parties stress the need for a consumption tax cut, but details are different. The Constitutional Democratic Party of Japan (CDP), which is the largest opposition party and is led by former Prime Minister Yoshihiko Noda, is looking to make food nontaxable for one year. Noda, who is considered to be on the side of fiscal discipline, said his party would only advocate a consumption tax cut that's fully funded and not dependent on bond issuance. The LDP and Komeito could work with the CDP to minimize the fiscal risk, if a consumption tax cut really becomes a policy option, Aoki said. 'In that sense, there might be some short-term volatility, but if the bond market recognizes that there won't be a massive tax cut, I think this will help curb an excessive rise of long-term rates," he said. Pro-fiscal spending parties remain popular, and this does add an element of uncertainty. The Democratic Party for the People (DPP) won 17 seats on Sunday and now has 22. It has said that tax relief can be backed by issuing government bonds. The DPP hopes to temporarily lower the consumption tax rate on all products to 5% until real wages start rising again. Sanseito, which significantly increased its presence by winning 14 seats, advocates eventually abolishing the consumption tax altogether, saying the government can issue bonds to finance the policy. Reiwa Shinsengumi and the Japanese Communist Party have also proposed scrapping the consumption tax. Nippon Ishin no Kai plans to reduce the 8% tax on food to zero for two years.
France 24
4 days ago
- Politics
- France 24
Japan's government projected to lose upper house majority in blow to PM Ishiba
Japanese Prime Minister Shigeru Ishiba 's coalition lost its upper house majority in elections on Sunday, local media projected, in a result that could bring an early end to his premiership. Ishiba's governing coalition was already humiliatingly forced into a minority government after lower house elections in October, shortly after he became prime minister and called the snap vote. Ishiba's Liberal Democratic Party (LDP) and its partner Komeito won around 41 of the 125 upper house seats contested on Sunday, short of the 50 needed to retain a majority, Nippon TV and TBS projected, based on exit polls. The right-wing populist party Sanseito was projected to have made strong gains, winning between 10 and 22 seats, adding to the two it already holds in the 248-seat chamber. Toru Yoshida, a politics professor at Doshisha University, told AFP before the media projections that if the coalition lost its majority, Ishiba "may need to step down". Japan could "step into an unknown dimension of the ruling government being a minority in both the lower house and the upper house, which Japan has never experienced since World War II," Yoshida said. At one of Tokyo's polling stations on Sunday, 54-year-old voter Atsushi Matsuura told AFP: "Commodity prices are going up, but I am more worried that salaries aren't increasing." Another voter, Hisayo Kojima, expressed frustration that the amount of her pension "is being cut shorter and shorter". "We have paid a lot to support the pension system. This is the most pressing issue for me," the 65-year-old said. Ishiba's centre-right LDP has governed Japan almost continuously since 1955, albeit with frequent changes of leader. Ishiba, 68, a self-avowed defence "geek" and train enthusiast, reached the top of the greasy pole last September on his fifth attempt and immediately called elections. But this backfired and the vote left the LDP and its small coalition partner Komeito needing support from opposition parties, stymying its legislative agenda. Trumped Not helping is lingering resentment about an LDP funding scandal, and US tariffs of 25 percent due to bite from August 1 if there is no trade deal with the United States. Japan's massive auto industry, which accounts for eight percent of the country's jobs, is reeling from painful levies already in place. Weak export data last week stoked fears that the world's fourth-largest economy could tip into a technical recession. Despite Ishiba securing an early meeting with US President Donald Trump in February, and sending his trade envoy to Washington seven times, there has been no accord. 10:46 Trump poured cold water on the prospects of an agreement last week, saying Japan won't "open up their country". "We will not easily compromise," Ishiba said this month. Ishiba's apparently maximalist strategy of insisting all tariffs are cut to zero -- although this could change post-election -- has also drawn criticism. "How well his government is able to handle negotiations over US tariffs is extremely important, as it's important for the LDP to increase trust among the public," Masahisa Endo, a politics professor at Waseda University, told AFP. 'Japanese first' The last time the LDP and Komeito failed to win a majority in the upper house was in 2010, having already fallen below the threshold in 2007. That was followed by a rare change of government in 2009, when the now-defunct Democratic Party of Japan governed for a rocky three years. Today the opposition is fragmented, and chances are slim that the parties can form an alternative government. The "Japanese-first" Sanseito wants "stricter rules and limits" on immigration, opposes "globalism" and "radical" gender policies, and wants a re-think on decarbonisation and vaccines. Last week it was forced to deny any links to Moscow -- which has backed populist parties elsewhere -- after a candidate was interviewed by Russian state media. "They put into words what I had been thinking about but couldn't put into words for many years," one voter told AFP at a Sanseito rally.
Yahoo
6 days ago
- Politics
- Yahoo
The Wheels Are Falling Off Netanyahu's Government
The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here. Outside of Israel, Benjamin Netanyahu appears ascendant. After the Israeli leader inflicted heavy losses on Iran last month, The New York Times dubbed the apparent victory his 'political resurrection' and 'the culmination of a hard-fought comeback from the lowest point in his long political career.' Inside Israel, however, the reality could not be more different. As has been the case for more than two years, polls continue to show that Netanyahu's coalition would lose the next election, were it to be held today. And this week, his government lost two of its parties, effectively leaving it with control of just 50 of the Israeli Parliament's 120 seats. The result: Netanyahu now sits atop a de facto minority government that is no longer able to legislate, and Israel is careening toward new elections, most likely in early 2026. The reason for this unraveling is twofold. To maintain his grip on power, despite his personal unpopularity and ongoing corruption trial, Netanyahu has relied upon two constituencies: the ultra-Orthodox religious parties (which hold 18 seats) and the far-right ultranationalist parties (which hold 14 seats). Both of these groups support policies at odds with the views of the Israeli majority, and both are now at odds with Netanyahu. For more than a decade, the ultra-Orthodox have backed Netanyahu even as many Israelis have turned on him. In exchange, the prime minister has provided generous state subsidies to ultra-Orthodox institutions and protected the community from Israel's military draft: Whereas most Jewish Israelis serve in the Israel Defense Forces, most young ultra-Orthodox men are instead paid by the government to study religious texts. This arrangement has been profoundly unpopular even among Netanyahu's voters but was tolerated during peacetime as a necessary concession for continued right-wing governance. [Read: The earthquake that could shatter Netanyahu's coalition] Since October 7, that tolerance has collapsed. Faced with an open-ended, multifront war, Israel is in desperate need of more manpower and can no longer countenance exempting the ultra-Orthodox—the country's fastest-growing demographic—from military service. Many Israelis, including those on the right, have become incensed by what they perceive as a lack of social solidarity from the ultra-Orthodox community, whose members have largely continued to go about their daily lives even as their neighbors have been forced to leave their families and businesses to fight Israel's wars. The Israeli supreme court has also ruled that the ultra-Orthodox carve-out violates the principle of equality under the law, tasking the legislature with instituting a fairer regime. This popular outcry, coupled with Netanyahu's political dependence on the ultra-Orthodox, has put the prime minister in a vise: He can either continue exempting the ultra-Orthodox and anger not just the public and the courts but also his own party, or revoke that exemption and lose the ultra-Orthodox—and with them, his coalition. Of late, Netanyahu has attempted to fudge the issue by pushing through legislation that would create a technical process for drafting the ultra-Orthodox but in practice make the new requirements easy to evade. This effort has met resistance in his party, however, and the bill has not passed—leading to the departure of the ultra-Orthodox parties from the government this week. For now, those parties have said that they won't vote to force new elections, giving Netanyahu time to try to appease them. But unless he can figure out a way to pass a bill that somehow satisfies the ultra-Orthodox and their critics, it's merely a matter of time before his erstwhile allies completely switch sides. And that's not Netanyahu's only problem. He is also facing threats of secession from his far-right partners, who are fundamentally opposed to ending the war in Gaza, because they seek to ethnically cleanse the enclave and populate it with Jewish settlements. Most Israelis oppose this far-right fever dream and support a deal that would end the war in exchange for the release of hostages. But as with military exemptions for the ultra-Orthodox, Netanyahu here is beholden to a radical minority whose votes keep him in power. At the same time, the Israeli leader is under growing pressure from President Donald Trump to end the Gaza war, once again putting him in an impossible position. If Netanyahu doesn't strike a deal, he risks alienating the U.S. president; if he does, he is likely to lose one or both of the far-right parties in his government. [Read: The Israeli government goes extreme right] Given these proliferating threats to his position, Netanyahu has been doing what he does best: playing for time. The summer recess for Israel's Parliament begins on July 27 and extends through the Jewish holidays, until late October. During that time, the Parliament cannot vote to dissolve itself, and so it would be hard for lawmakers to compel new elections. Netanyahu could reach a cease-fire in Gaza, for example, and the far-right would not be able to immediately bring down the coalition. The prime minister just has to run out the clock until the end of the month, and then he will have space either to get all of his partners back on his side—an unlikely prospect—or to make moves that upset his coalition but put him in a better position for the election that would be called upon the Parliament's return. Whenever that contest does happen—most likely around January—Netanyahu will face arguably the steepest political challenge of his career. Last election, his coalition received just 48.4 percent of the vote, attaining a parliamentary majority only because of a technicality in Israel's electoral system. That coalition has been losing in the polls since April 2023, and no amount of success against Hezbollah or Tehran has altered the trajectory. Thanks to his campaign in Iran, Netanyahu may be in his strongest position since the catastrophe of October 7. But after alienating so many of his allies and the majority of the Israeli people, that still might not be enough. Article originally published at The Atlantic
