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Japan: An Opportunity Slipping Away?

by | April 26th, 2011 | 12:55 pm
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Last month, in a Washington Post outlook piece, I argued that if handled adroitly, the triple crisis facing Japan could be used to modernize the country’s politics. The government’s response to the disaster has been anything but adroit, and the opportunity to use the crisis to propel the nation forward is slipping away.

In the first public survey since the catastrophe, polling done jointly last week by the Nikkei, Japan’s equivalent to the Wall Street Journal, and TV Tokyo depict an understandable erosion of support for the incumbent Prime Minister Kan Naoto, disappointment in the provision of emergency relief, and utter dismay at the handling of the nuclear situation, with 70 percent of respondents critical of the government’s transparency and management of the situation.

The poll also asked respondents how they thought that reconstruction should be financed. A plurality, 38 percent, supported financing rebuilding solely through tax increases; higher taxes together with bond finance were supported by another 31 percent, while only 13 percent favoring bond finance alone. The public consensus for raising taxes to at least partly pay for reconstruction is striking.

The incumbent Democratic Party of Japan (DPJ) is reportedly considering raising the consumption tax from 5 percent to 8 percent to fund reconstruction. So far, so good. What could prove to be more politically problematic is if this is portrayed as a permanent increase in the tax rate, or if an in few years, a DPJ-led government attempts to extend what was supposed to be a temporary tax increase to deal with an extraordinary situation. While there may be a national consensus around increased taxation to rebuild Tohoku, the public may be less willing to pay permanently higher taxes to deal with long-run social welfare issues associated with Japan’s aging population.

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