Noda says Japan running out of time to increase taxes, restart reactors


Prime Minister Yoshihiko Noda, seen here in November 2011, says Japan must hike taxes and restart nuclear reactors. (Kazuhiro Nogi/AFP/Getty Images)

Japanese Prime Minister Yoshihiko Noda said Thursday that he faces policymaking challenges “weightier” than those of his predecessors, adding that the country can no longer afford to delay decisions about its most divisive issues, including a tax hike and the restarting of its nuclear reactors.

“The greatest problem in Japanese politics over the last two decades is that we put off what needed to be done,” Noda said. “We are at the point to make tough decisions.”

Noda’s call for urgency hints at diminished faith in Tokyo’s fractious political system, a source of tension for the Obama administration ahead of the prime minister’s April 30 trip to Washington. No recent Japanese prime minister has lasted long enough in office to realize his major policy goals, and Noda faces much the same political combat — within his own party and between his party and the opposition — that has undone his predecessors.

In an interview with The Washington Post, Noda portrayed himself as a pragmatist who would appeal directly to the public, presenting a detailed case for his policies. He said that a restart of nuclear reactors, for instance, would lower operating costs of businesses and prevent energy shortages in Japan’s sweltering summer. A consumption tax increase would ease fears about ballooning national debt and prevent a collapse of the aging country’s strained social security system, he said.

Noda acknowledged that such proposals are “not so popular among the people.” Nor are they uniformly supported by the ruling Democratic Party of Japan. The approval rating for Noda’s cabinet fell this month below 30 percent, a level from which Japan’s five previous, short-lived prime ministers never rebounded.

Noda said it remains an open question whether politicians here can “stand firm for the national interest.”

“In that respect,” he said, “I’m confronting a difficult situation.”

Noda will arrive in Washington with little evidence of progress. Although Japan has spent almost two years debating participation in a regional free-trade pact that involves the United States, Tokyo hasn’t made a final decision. The Trans-Pacific Partnership would open new markets for Japan’s exporters, but it would also endanger the country’s domestic agriculture industry, long protected by high tariffs.

Noda had hoped to be able to tell President Obama during their meeting that Japan would join the pact, but he acknowledged just days ago that he couldn’t, according to the Kyodo news agency.

Negotiations also remain at a standstill on the relocation of an inner-city Marine air station in Okinawa, with leaders in Tokyo unable to soften local opposition to a proposed new site on a less populated part of the island.

Analysts in Tokyo say that Noda will fight for the free-trade and base issues only if he resolves his stated top priority — raising the consumption tax. Noda, a former finance minister who took office seven months ago, has vowed to stake his political life on the tax increase, which would be used to fund mounting social security costs. When Noda’s cabinet submitted the tax bill last month, however, several members resigned in protest. The opposition, meanwhile, senses a political opportunity to force Noda from office over the issue and then begin the debate anew.

“We must do what we have to do now, otherwise social security is unsustainable,” Noda said. “We cannot let that happen. Currently, we are covering the cost by issuing deficit-covering bonds, passing the burden to the future generation,” whose debts will be all the higher.

Noda also laid out the case for restarting Japan’s nuclear reactors, despite majority opposition to atomic energy in the wake of the accident at the Fukushima Daiichi plant last year.

Currently, Japan is operating just one of its 54 reactors; most of the rest came offline for regularly scheduled maintenance. Because of opposition from local leaders and provincial governors, those temporary halts have turned into open-ended shutdowns.

Noda said that if Japan cannot restart its reactors soon, particularly in the nuclear-dependent industrial region of Kansai, corporations could face power shortages and rising energy costs.

“I think it’s the government’s responsibility to ensure that there won’t be too much stress on the people and on mid- to small-size corporations,” Noda said. “So we must explain to the people of Japan clearly, with that in mind.”

Special correspondent Yuki Oda contributed to this report.

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

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