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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: borb who wrote (1622)	11/20/1998 5:24:00 PM
From: chirodoc	Respond to of 3902

this is where the battle is being drawn Hard Bargaining Over VAT In Store For New Political Coalition TOKYO (Nikkei)-The new partnership agreed upon Thursday by the ruling Liberal Democratic Party and the Liberal Party - the latest surprise in the nation's political saga - faces many roadblocks as the LDP continues its uphill battle in the Diet, analysts say. The two parties, whose combined seats in the Diet's upper house still fall short of an absolute majority, must smooth their differences on a wide range of policy issues. Analysts here say the primary stress point is the parties' agreement to undertake a "fundamental revision" of the nation's consumption tax. Opposition within the LDP to lowering or suspending the consumption tax is almost certain to hinder the building of a party consensus, and the issue could disrupt the two parties' joint compilation of the fiscal 1999 budget. At a meeting Thursday with LDP President Keizo Obuchi, who also serves as prime minister, Liberal Party chief Ichiro Ozawa pressed for a suspension of the consumption tax. His basic plan involves phasing the tax back in as the economy recovers and possibly earmarking the revenue for social-welfare purposes. But Ozawa's plan would complicate two already problematic issues in the 1999 budget: a reform of the national pension system and the dividing of the fiscal burden of tax cuts between the national and regional governments. Within the LDP, the view is gaining ground that a portion of consumption-tax receipts should be funneled to the basic pension system in order to lower the premium burden on plan contributors. The LDP is also urging that 2% of the 5% consumption tax be counted as regional revenue, up from the current 1%. In both cases, however, the LDP has assumed that the policy debate would move forward without a suspension, or even a reduction, of the consumption tax. Internal party opposition to revising the tax apparently remains strong. (The Nihon Keizai Shimbun Friday morning edition)