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Japan PM reshuffles cabinet in bid to win support for tax hike

Japanese Prime Minister Yoshihiko Noda (center, front) and his cabinet members pose for photo after their first cabinet meeting at the prime minister's official residence in Tokyo on Friday. (KAZUHIRO NOGI/AFP/GETTY IMAGES)

— Japanese Prime Minister Yoshihiko Noda shook up his cabinet on Friday in a bid to appease opposition parties and build support for his contentious tax hike proposal.

In what Japan’s domestic media described as a “minor” reshuffle, Noda replaced five of his 17 ministers, including two who had recently come under criticism for their verbal slip-ups. But the move comes at a critical time for Noda, who in the coming months will either win wider backing for his fiscal policy or squander what’s left of his popularity.

Noda, a fiscal hawk, has pledged to go ahead with his plan to double Japan’s consumption tax by 2015 while also reforming the country’s social security. But he faces “a lot of hurdles,” he admitted last week. The opposition parties don’t want to cooperate with him. And several members of his own party have already defected, raising the possibility of a wider fracture.

Friday, a government spokesman described the tax hike as a “challenge that cannot be escaped,” and the reshuffle surrounds Noda with new allies for the fiscal measures.

Katsuya Okada, a former foreign minister, will become Noda’s deputy prime minister. He will have control over tax and social security reform policy. He will also lead tax reform talks with opposition parties, government officials said.

Noda also removed two of his least popular cabinet members, Defense Minister Yasuo Ichikawa and consumer affairs minister Kenji Yamaoka, both of whom had been censured in Japan’s upper house after making controversial comments. Yamaoka had spoken favorably about a pyramid marketing scheme, and Ichikawa had claimed he didn’t know about a famous 1995 rape case in Okinawa involving a 12-year-old girl and three U.S. servicemen.

Initially, Noda refused to fire either minister for their comments. But opposition parties demanded their replacement, threatening to boycott any tax deliberations unless they were removed. Meanwhile Noda lost public support, with his approval rating falling below 40 percent in the latest polls.

Jin Matsubara replaced Yamaoka as consumer affairs minister, and Naoki Tanaka replaced Ichikawa as defense minister.

But analysts in Tokyo are unconvinced that the changes will give Noda the necessary push. The ruling Democratic Party of Japan controls just one of parliament’s two houses, and the top opposition party — the Liberal Democratic Party (LDP) — has proven itself as a dogged obstructionist, willing to object to all policy moves, even the ones (like the tax hike) that some members agree with.

Noda plans to submit a bill soon calling for the consumption tax raise — from the current 5 percent to 8 percent by 2014, then to 10 by 2015. Passage of that bill would ease Japan’s burden as it staggers under the world’s largest debt and struggles to support its rapidly aging population.

One scenario is that the LDP accepts the terms of the tax hike, but only if Noda dissolves the lower house, where the DPJ holds power, and calls for a new election. Depending on which party grabs power, the election could give Japan its eighth prime minister since 2006.

“I think the opposition parties are determined to force an election in the coming year,” said Koichi Nakano, an associate professor of political science at Sophia University. “Noda faces a mountain of difficulties.”

Chico Harlan covers personal economics as part of The Post's financial team.



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