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Tokyo Gov. Yuriko Koike during an interview with The Nikkei.

Koike affirms she'll stay as party chief after general election

'Excluding' some candidates helped new party clarify positions, governor says

| Japan

TOKYO -- Yuriko Koike will stay at the helm of her Party of of Hope beyond this month's lower house election and stands by her controversial decision on member selection, the popular Tokyo governor told The Nikkei on Friday.

"I am both governor and party chief," Koike said in an interview here. Hope's leader in parliament will be chosen after the Oct. 22 race, as Koike is not running for a seat in the lower house this time around.

The governor has attracted controversy in recent weeks for saying members of the Democratic Party whose positions on issues such as national security and changes to Japan's constitution conflict with Hope's would be "excluded" from the new party. The former top opposition group has effectively merged with Hope, directing its lawmakers to run under the group's banner. But left-leaning Democrats have formed their own opposition party.

"We do need to be careful about the words we use," Koike conceded when asked about her statements. However, she said the party's stance "on national security and other issues has become a good deal clearer" due to the public attention her comment attracted.

"I think it gave us momentum," Koike said. "While realignment of political forces has been largely engineered behind the scenes, this latest development took place in the public eye -- is that not significant?" she asked. But she demurred when asked whether Democratic lawmakers in the upper house would also join Hope, saying she would watch how discussions within that party proceed.

During a news conference Friday, Koike rejected the possibility of forming a coalition with the ruling Liberal Democratic Party regardless of the outcome of the upcoming election. Her Party of Hope will make decisions on parliamentary cooperation on an issue-by-issue basis, she added.

Directing attention

The governor also softened some of her party's economic policies when speaking with The Nikkei. Hope's platform says the party will "freeze" plans to increase Japan's consumption tax in October 2019, and instead consider a tax on major companies' retained earnings to bring in additional revenue. Business leaders have pushed back, claiming such a policy would amount to double taxation.

On Friday, Koike said Hope "is not dead-set on taxing" those earnings. Rather, the party's ultimate goal is to have companies put retained funds "back into society in the form of dividends or pay raises," she said. The very act of mentioning a potential tax "draws attention to the problem" and encourages action, according to the leader.

Actual solutions could come from Japan's Corporate Governance Code, which encourages companies to maintain open communication with various stakeholders. The Party of Hope intends to "promote dialogue with investors, shareholders, employees and others," Koike said.

"We look to offer incentives based on the code, rather than impose a tax," she explained, saying the party could consider favorable policies for companies that actively invest. But she did not rule out punitive taxation for companies that do not follow the code.

In for an overhaul

On the issue of a consumption tax hike, Koike reiterated that Hope aims to "freeze" that increase for now, explaining that further decisions would be based on "the state of the economy and people's perception" of a recovery. She did, however, note that the consumption tax "is a reliable source of revenue for social security programs."

"The current social security system has been developed by simply following what existed before, and the way it is designed needs to be changed," Koike argued. Hope's platform calls for a universal basic income in place of a host of other programs. But she insisted Friday that such a policy is a matter "for our new party to discuss going forward."

Shortfalls from a delayed consumption tax hike could be plugged by examining existing programs "one by one to see if they are truly necessary," she said. The governor pointed to her experience trimming wasteful spending from Tokyo's budget as evidence of her independence from "vested interests, political dealing and a duty to precedent." These cuts could yield "trillions of yen," or tens of billions of dollars, in all, Koike said, though exactly what is on the chopping block was not specified.

The governor also noted that she "would not follow in the footsteps" of the former Democratic Party of Japan's efforts to make similar cuts during its stint in power from 2009 to 2012, citing "a number of drawbacks" to that party's approach.


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