Tag Archives: consumption tax

Noda Might Face No-Confidence Motion Over Consumption Tax

Japanese Prime Minister Yoshihiko Noda is likely to face a no-confidence motion over his plan to raise the consumption tax.

Senior officials from three small opposition parties agreed Thursday to submit a no-confidence motion against the Noda cabinet to the House of Representatives, the lower chamber of parliament, in order to block the passage of bills to raise the tax.

The three parties–the Japanese Communist Party, the Social Democratic Party and Your Party–agreed that the no-confidence motion should be submitted before the House of Councillors, the upper chamber of parliament, votes on the bills. The Lower House approved the bills in June.Peoples Life First, a new political party set up by Ichiro Ozawa and his followers after they bolted from Nodas ruling Democratic Party of Japan in opposition to the tax increase, plans to join the three parties.

If the Lower House passes a non-confidence motion against a cabinet, the prime minister needs to resign or call a general election.

This Week’s Tax Debate in Japan’s Diet Could Move Markets

Japanese stocks have had a good run so far this year.  But whether the good times continue–both for stocks and bonds–depends critically on whether the faction-riven Democratic Party of Japan (DPJ), under the embattled leadership of Prime Minister Noda Yoshihiko, comes up with a credible (and eventually passable) consumption tax increase bill as scheduled this week.

If not, the bearish scenario is that Japan’s bond market will continue heading down, and pull stocks with it.  This scenario has been given a name:  “Ozawa shock.”

Since hitting a low of 8,160 last November 11, the Nikkei 225 Index is up a whopping 23%.  But last Friday’s 10,011 close was off 115 yen (1.14%) from the day before, the second biggest drop of the year.

Read the rest of the story: Whither Japan Stocks and Bonds: This Week’s Tax Debate Could Move Markets.