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Prime Minister Shinzo Abe has set his sights on revising the constitution.
Politics

Abe's checklist: revise constitution, raise tax, stay in office

Elections could help or hurt a prime minister thinking about his legacy

TOKYO -- For Japanese Prime Minister Shinzo Abe, who has been trying to restore his plummeting public support, 2018 will be crucial in his quest to stay in office until the 2020 Tokyo Olympics.

There are three challenges set for 2018: the leadership race of Abe's Liberal Democratic Party in September, a lower house election by the middle of December, and, possibly, a call to postpone a consumption tax increase for the third time.

Adding to, not eliminating

On June 16 at a Tokyo hotel, Abe attended a fundraising party for an LDP faction led by Sadakazu Tanigaki, the previous LDP president who had been party secretary-general until last summer, when he suffered a serious bicycling injury. He remains in the hospital. Calling Tanigaki "a man of virtue with great judgment," Abe said: "I, too, must proceed with modesty and honesty, just like Mr. Tanigaki. I must also strive to be even more prudent than before."

The prime minister has already begun laying the groundwork for extending the life of his government and revising the constitution. He intends to use a people-centered policy he proposed on June 19 as a tool to turn the tide. He could also, possibly, wield a cabinet reshuffle this fall.

As for the constitution, Abe will likely shelve the LDP's draft bill that aims to eliminate Paragraph 2 of Article 9, the clause that keeps Japan from holding any war potential, thus allowing the country to exercise collective self-defense. Instead, Abe has proposed adding a new paragraph to the article to give Japan's Self-Defense Forces a constitutional basis, while keeping intact the remaining part. The idea is to reaffirm, in text, the current government's interpretation of the constitution -- that Japan can engage in collective self-defense under limited conditions.

Abe's pragmatism was on display early last month during an upper house budget committee meeting. He had been asked a question by Renho, the leader of the opposition Democratic Party. He answered, "What is important for a politician is not just to say great things but to deliver results. The LDP's draft bill for constitutional revision in its present form cannot win a two-thirds majority in both houses. And sometimes a politician says things, thinking how much public support they will earn him."

In trying to revise the constitution for the first time since it was enacted over 70 years ago, Abe is taking a chance. He wants his legacy to include the amendment, so he is in a bit of a hurry to get the Diet to call for a referendum on the matter now -- while he has the crucial two-thirds majority in both houses.

The LDP, its junior coalition partner Komeito and a few pro-amendment opposition parties like Nippon Ishin no Kai currently hold more than two-thirds of the seats in each chamber.

It is unclear whether Abe can maintain this supermajority, needed to call a referendum, after the next lower house election, to be held in late 2018, or possibly sooner, if the chamber is dissolved before then.

Abe clearly took heed of his peace-loving coalition partner in making the new proposal. Komeito's constitution committee suggested in 2004 that Article 9 should be preserved and new language should be added to ensure the existence of the SDF.

Many pro-amendment LDP members want a constitutional reform bill that gets the backing of the Democratic Party, the largest opposition group. But Abe appears to believe that because the pro-amendment camp has the two-thirds majority to pass the bill by themselves -- to formally call a referendum -- the Democratic Party will likely tilt toward supporting the bill rather than simply opposing it.

If this is his thinking, Abe has little reason to rush to dissolve the lower house -- unless he has confidence in maintaining his cherished supermajority. Abe has instructed his party to draft an amendment bill by the end of this year. The earliest Abe would then be able to submit the bill would be in January, when the next ordinary Diet session convenes. If all goes smoothly, passage could come next June. Since a national referendum must be held within 60 to 180 days of being called -- and to give Japanese voters enough time to think about their first-ever constitutional referendum -- polling would likely take place sometime between the fall and end of 2018.

The ruling coalition has an overwhelming majority in japan's upper and lower houses.

Lower house terms are set to end on Dec. 13 of that year, and an election will then be held. In theory, Abe could dissolve the house earlier for a snap election to, say, consolidate his power base ahead of the LDP leadership race in September, when he will seek, and is expected, to win a third term.

Abe, though, is unlikely to take the dissolution route -- unless he suddenly loses support from fellow LDP members. Though Abe is wary of former Secretary-General Shigeru Ishiba possibly standing in the leadership race, he still believes he has the upper hand.

Because both the referendum and lower house elections are likely to be held around the same time, talk of coupling them has been going on within the LDP. On May 15, Abe mentioned this possibility during an interview with BS Japan, a satellite broadcaster. "There is an argument that having a national election and a constitutional referendum together could cause confusion," he said. "Others, however, question whether it is reasonable to hold a lower house election, an upper house election and a referendum all separately. I hope the LDP, the ruling coalition and the constitutional commissions [in both houses] consider this issue."

Unite and conquer

In principle, Article 96 allows same-day voting. Okiharu Yasuoka, head of the LDP's constitutional reform headquarters, spoke on the matter during a lecture on June 13. "Some argued that [the two] should be held separately," he said. "But [such a scheme] is not prohibited. There is room for political judgment."

But a vote on whether to amend the constitution is not on the same level as picking lower house representatives affiliated with specific political parties. Campaign periods differ, and regulations are much tighter for elections than for referendums.

Then why do some politicians keep talking about holding a referendum and lower house elections on the same day? Voting "no" in the referendum would mean going against the will of the Diet, which would have to call for the referendum. The implications of this are profound. Though there is no academic consensus, politicians largely agree that were voters to reject the constitutional amendment, Abe would be pressured to take responsibility. Coupling a referendum with a lower house election, therefore, is seen as a way to minimize this risk.

On June 8, opposition leaders from the Democratic Party, the Japanese Communist Party, the Social Democratic Party and the Liberal Party agreed to reject the Abe government's attempt "to change Article 9 for the worse." Abe sees how the issue is uniting these parties. He also feels that coupling a single-issue referendum with lower house elections would cause a rift within the Democratic Party as to whether to join hands with the Communist Party. He probably thinks this would be to his advantage.

For Abe, adding a paragraph to the constitution, rather than deleting or changing a key clause, is a pragmatic tactic to help strengthen unity among the ruling camp, whereas coupling the referendum with a lower house election is a pragmatic tactic to get the opposition to start bickering. Abe's best-case scenario is to win a third term as LDP president in September 2018 and carry the momentum toward a constitutional referendum and lower house elections later that year.

But if the LDP stumbles between now and early 2018, the amendment would have to take a backseat, giving way to lower house election campaigns. Secretary-General Toshihiro Nikai told journalists on June 16 that "for the sake of sounding out the people's views, we should handle big issues one by one." Nikai was thus signaling caution toward asking voters to decide on the amendment and on who their lawmakers will be at the same time.

The 2018 lower house election cannot be postponed, but the referendum bill can be, possibly until 2019, perhaps even later.

Consumption tax for education

A consumption tax increase has been delayed twice in the past three years. Now Abe has until December 2018 to decide whether to go ahead with the same tax rate hike, from 8% to 10%. The increase is scheduled to take effect in October 2019. But the government will have to come up with a draft budget for fiscal 2019 by the preceding December.

Debate over the tax hike will accelerate in 2018 as the government compiles a mid-term assessment of its fiscal rehabilitation plan through 2020.

Rumors of a third postponement are already spreading. On June 15, some 40 politicians skeptical of Abe's signature policy mix, known as Abenomics, held a voluntary study session on Japan's fiscal, financial and social security systems. The members included Takeshi Noda, former chairman of the LDP's tax system research commission, and Seiko Noda, former chairman of the party's General Council. Ishiba, who has been increasingly critical of Abe, also joined. The Ministry of Finance worries that Abe might decide to again delay the tax hike to keep the issue from puncturing his popularity ahead of the LDP leadership race and the 2018 lower house election -- and to allow him to continue focusing on his pet constitutional addition.

Another possibility is that Abe decides to raise the tax rate as planned and uses it to garner support for constitutional revision. On top of expanding Article 9, Abe is also keen on establishing the right to free education under the constitution -- an idea first proposed by Nippon Ishin no Kai. But to pay for all the schooling, Japan would need an additional 5 trillion yen ($44.9 billion), according to one estimate.

The Democratic Party has criticized the idea. "What enriches education is funding," it said, "which can be made immediately available with proper legislation -- and without revising the constitution."

One way to secure the necessary funding would be to use some of the increased consumption tax revenue, which is currently supposed to go toward social security expenses. When the tax rate is raised, the state can expect another 2 trillion yen or so a year -- after subtracting payouts to low-income pensioners and local governments, and after accounting for lost tax revenue due to reduced rates for specific items like food. If the government decides to divert some of this to education, it may be able to fend off opposition criticism that its free education plan has no fiscal basis.

The government is nowhere close to its goal of achieving a primary surplus in fiscal 2020, even with the planned consumption tax hike. If it delays the increase for a third time or fails to reduce debt despite going ahead with it, ratings agencies may downgrade Japanese government bonds. This in turn could provoke public anger toward Abenomics.

Of course, the state of the economy will also be factored into any decision about the tax hike. Like Abe's eagerness to remain in office, early 2018 will be crucial for the constitutional amendment and tax hike debates.

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