Nakasone Tax Plan Dealt Setback at Polls

Prime Minister Yasuhiro Nakasone’s controversial tax reform plans suffered a setback Sunday with an unexpected by-election defeat for Japan’s ruling Liberal Democratic Party.

Jinichi Ogawa became the first Socialist from the conservative northern prefecture of Iwate to be elected to the House of Councilors, or upper house, in 19 years, after a campaign that focused on Nakasone’s parliamentary maneuvers to force through the tax bill.

With 95% of the votes counted, Ogawa had 402,375 against 193,506 for Liberal Democratic candidate Rei Isurugi, the widow of Liberal Democratic upper house member Michiyuki Isurugi, the election commission announced.

Before the campaign started, political analysts had predicted an easy win for Rei Isurugi because of her strong organizational support in a conservative area and an expected sympathy vote.

Alarmed by Tax Bill

But Nakasone’s introduction of a sales tax bill, a pillar of his reform plan, forced store owners and industrialists to withdraw support for their natural ally, Kyodo News Service said.

“We can no longer stand Prime Minister Nakasone’s violation of his election promises and the contents of the sales tax. We couldn’t help choosing the Socialist,” Jutaro Kikuchi, a former staunch Liberal Democratic supporter and a leader of a local store owners’ association, told Kyodo.

During last year’s general election campaign, Nakasone promised income tax cuts and said he would not introduce a large-scale indirect tax. In Parliament, he has described his proposed 5% value-added tax as a medium-sized indirect tax and suggested a list of exemptions to it.

After Sunday’s victory, the Japan Socialist Party has 42 seats in the 252-member upper house, against the Liberal Democrats’ 143. In the July 6 election, the Liberal Democrats won 304 of the 512 seats in the House of Representatives, the more important of the two chambers in Parliament.

“This time, we couldn’t forgive the high-handedness of the 304 seats,” Kyodo quoted Kikuchi as saying.

The opposition parties boycotted parliamentary sessions for a month after Nakasone introduced the sales tax bill, criticizing him for allegedly ignoring his campaign promises.

With scores of municipal, mayoral and gubernatorial elections due next month, the Socialist victory was a blow to Nakasone and is certain to spur nationwide protests against the tax bill.