TOKYO -- To most Americans, Japan appears to be a country that has its economic act together, a land whose decision makers promote the national welfare and avoid the selfishness that afflicts their U.S. counterparts.
But every so often, the reality shines through -- namely, that policy making here can be just as influenced by special interests as it is in the smoke-filled rooms of Washington or any state capital.
The latest illustration came this past week, when the ruling Liberal Democratic Party unveiled its proposal for a new national land tax. The plan was supposed to be the centerpiece of a long-awaited government program aimed at reversing the spiral in property prices, which has put the dream of homeownership far beyond the reach of many middle-class Japanese.
But the proposal proved to have been substantially watered down as a result of intense lobbying by real estate and corporate representatives. The Liberal Democrats rejected the arguments of a government advisory body that a stiff tax on business-owned property -- set at a rate of perhaps 1 percent -- was necessary to penalize speculators and bring housing prices down to earth.
Instead, the party proposed an initial tax rate of 0.2 percent, rising to 0.3 percent in 1993. The levy would be even less painful than those figures suggest because the rate would apply to an "assessed" property value equal to about half the true market price; moreover, the plan would provide substantial exemptions, allowing all property valued below $7.5 million to escape the tax.
The proposal evoked a torrent of complaints that the Liberal Democrats had sold out to the real estate lobby and to big corporations that are among the nation's largest landowners.
On TV news shows, commentator after commentator described the plan as having been rendered hone nuki -- a phrase that means "bones removed" and can be loosely translated as "toothless." Economists said the impact on property prices would probably be minimal.
"This is intolerable," declared an editorial in the Mainichi Shimbun, a major daily newspaper. "What are we supposed to do about housing for the young and middle-aged working class?"
The development was a reminder that, despite recent scandals that were supposed to engender reforms, the Liberal Democrats remain very much a captive of the interest groups that have financed and supported the party's dominance over Japanese politics for 35 years.
The Liberal Democrats were widely believed last year to be facing a choice between changing their ways or losing their grip on power.
In 1989, two prime ministers were forced to resign amid scandals, and the party lost control over the upper house of the national legislature. Many analysts contended that voters had finally grown fed up with the party's cozy ties with moneyed interests. The electorate's resentment was said to be fueled by anger over the cramped living quarters and long commutes that much of the population is forced to endure.
The land tax issue seemed to offer the Liberal Democrats an opportunity to show that they were on the side of the hard-pressed "salaryman" rather than the speculators and others who have grown rich off the extraordinary financial boom of the past decade.
Instead, last week's plan appears to have given ammunition to the party's critics. "This shows the worst quality of the LDP," said Naoto Kan, a legislator who belongs to the United Social Democratic Party. "They have shown clearly that they are on the side of the 'haves.' "
Business lobbyists have been warning, on the other hand, that the tax shouldn't be set too high because property prices are already starting to tumble as a result of rising interest rates and an official campaign to severely limit new loans for real estate speculation. Too painful a tax could engender a collapse in the market that would cause a financial debacle, they argued.
Evidence in support of this argument emerged Friday, when Shuwa Corp., a major property developer, announced that it had been forced to seek a bailout loan from retail giant Daiei Inc., whose president said he had feared "devastating damage to the Japanese economy if Shuwa went bust."
The tax plan that has emerged would raise less than $2 billion in revenue, it is estimated, and the prevailing view among academic experts here is that the proposal errs on the side of painlessness.
"Land prices would not go down dramatically -- just a little bit" if the LDP's proposal is adopted, said Kikuo Iwata, a professor at Sophia University.
Iwata rated the plan a 10 out of a possible 100 -- giving it points only because it was at least a step toward introducing a national tax on land.
The plan must still be submitted to the cabinet and then to the legislature, where it could be modified, but analysts were doubtful that it would be strengthened much in view of the ruling party's stance.
Business lobbyists were reportedly hoping to see the new land tax killed altogether in the legislature. Their theory is that the opposition parties will be so disgusted with the proposal's weakness that they will refuse to vote for the tax in the upper house, which they control, and the result will be no new tax at all.