Eneos Gas StationA few months back I had discussed the possibility of Japan’s Provisional Gas Tax not being extended as the Upper and Lower Houses of government vie for control of policy. In the post I had laid out my expected series of events regarding this hotly contended temporary tax measure and, oddly enough, I have been pretty accurate on most counts.

The post was written in mid-January but with the odd behaviour exuded by the leader of the opposition, Ichiro Ozawa, it was pretty obvious what was going to happen. To that end, I had listed five things that would likely occur if the two houses couldn’t cooperate just a little bit and pass this rather bloated law:

  • The law will be held up until too late
  • The government will put their marketing team into action and say “The month of April will be ‘Half-Tax Month’ to ‘help families deal with the rising costs of gas in this country’”
  • Citizens will be happy with the 130 Yen gas for the whole month of April, and thank the LDP
  • May 1 the revised Special Taxation Measures Law will come into effect, promising another decade of double-taxation and sub-standard road conditions
  • The Japanese people will go back on auto-pilot and pay more attention to the comedians on TV than the people that silently rule their lives with excessive laws, taxes and personal agendas.

The first point has come to pass. The second has yet to be seen and, with Prime Minister Fukuda’s recent apology on the subject, it will likely not happen. The third is already happening, as people all over the country have woken up to ¥128 for the first time in over a year. The fourth item might be a bit too optimistic, but I’m sure the LDP will put some solid pressure on the opposition parties to work out some kind of arrangement. And finally, the last point is something that we can’t quite comment on as the whole political game of Submit and Veto has not yet been fully played out.

Nobody Took the Bet

When these predictions were first presented, I had offered to make a $10 bet with anyone that thought I might have been wrong. Luckily, nobody has picked up on that offer as it is technically illegal to bet money in this country. That said, it will be interesting to watch this situation play out a little more in the coming weeks as it appears that the two main parties in the Japanese government are about to come to some kind of mutual back-scratching agreement, so long as Ozawa doesn’t renege on his end of the bargain … again.

Oddly enough, this is one of those days where I’m not happy to be saying “I told you so,” which means I won’t. Instead, I’ll once again express my concern over the backwards slide Japan’s economy is currently taking. Investors have lost confidence in the global markets and this is not the time for the federal government to bicker with each other over matters that could easily be resolved with open and honest discussions. However, Ozawa and the rest of his Veto Party members couldn’t care less about Japan’s appearance to the rest of the world as they’re too busy flaunting their limited powers in the name of democracy. The last time I had seen an opposition party set unrealistic anchors and unorthodox secret reserves during policy deliberations, the government collapsed in a heap of squirming pigs and flailing arms.

It Could Be Worse

All this said, it could be worse. For the most part, the opposition party isn’t standing in the way of everything the LDP tries to accomplish. An extension on sections of the Special Taxation Measures Law was granted at the last minute yesterday, granting a little reprieve from the total loss of tax money from this source. However, the longer we see a low gasoline price in this country, the worse it will be in the long run.

I don’t mean to say that the government should raise the taxes on our already sky-high gas prices. Rather, the Fukuda government has warned us that if these taxes are dropped for even a single day, the lost revenue will need to be collected from other areas. Considering how the government is not yet going after all the companies that have scammed billions of Yen from taxpayers through false claims against the transportation coffers, this likely means an increase in the home owners tax or the land transfer tax.

Should the fed increase taxes in other areas to make up for this multi-billion Yen loss of daily tax revenues? No. That said, the federal government should really take a hard look at their accounting books and figure out where all of our tax money is actually going. I bet that if a CGA-certified accountant spent a week at the Ministry of Finance, they’d find all sorts of money the government didn’t know was stolen.

What’s your take on the lower gas prices or the situation in the Parliament? Is this a good thing for Japan?