Shinzo Abe, Japan’s prime minister, has gambled his political future by calling a snap election as he seeks to push back a scheduled tax increase, arguing that recovery is “the only path” available to the world’s third-largest economy.
Rumours had been building in recent days that Mr Abe was preparing to dissolve parliament as he sought a new mandate to delay a second increase in consumption taxes, due next October. On Tuesday evening Mr Abe confirmed in a rousing 15-minute speech that he would go to the polls, challenging detractors to come up with better ideas to put Japan on a stronger growth trajectory.
Delaying the tax by 18 months was a “grave, grave” decision, Mr Abe said, but would be justified if Japan was to make a complete exit from the deflation it experienced for much of the past 15 years.
“We cannot let this chance go,” he said. “We cannot go back to that dark, troubled period.”
The decision comes as Japan struggles to shake off the demand-sapping effects of the first increase in consumption taxes in 17 years, which took effect in April. Preliminary data on third-quarter gross domestic product this week indicated that the tax tipped Japan into a technical recession– its fourth since the financial crisis – in the six months to September.
The weak data have caused many to question the multi-faceted revitalisation programme Mr Abe has pursued since reclaiming the premiership less than two years ago. So far, the most obvious effect of those efforts has been a collapse in the yen, which has boosted companies’ profits but pushed up people’s cost of living – a squeeze exacerbated by April’s tax increase, from 5 per cent to 8 per cent.
Household incomes have risen a little, boosted by overtime and bonuses. But base wages slipped 2.6 per cent in September when adjusted for inflation, the government reported on Tuesday, extending a stretch of year-on-year falls from May 2013.
“The trend hasn’t changed,” said Yukio Edano, secretary-general of the main opposition party, the Democratic Party of Japan, after Mr Abe’s address. “Even though share prices have risen over the past two years, the lives of the public have not improved.”
The prime minister said that the tax would be raised to 10 per cent “without fail” in April 2017, suggesting that fiscal hawks within the cabinet have successfully lobbied for the removal of a clause which awards ministers discretion. The government would honour its longstanding pledge to balance its books – excluding debt-service payments – by the 2020 fiscal year, Mr Abe added.
The election is not likely to radically alter the balance of political power in Japan, where the ruling LDP enjoys a support rate of about 37 per cent, according to NHK, compared to just 8 per cent for the DPJ, its nearest rival. Analysts said the turnout will probably be low, and opposition parties seem in no state to mount a serious challenge over the 26 calendar days until the election – which resets the clock on Japan’s four-year cycle – on 14 December.
Takao Toshikawa, editor-in-chief of InsideLine, a political newsletter, said that the worst case for the LDP would be a loss of “30 to 40” of its 294 seats. That could still leave it with a comfortable majority in the 480-seat lower chamber of parliament, the more powerful of the two, given the 31 seats held by Komeito, its alliance partner.
However, voters are likely to question the prime minister’s motives for going to the polls less than two years into a four-year electoral cycle.
The timing is “very convenient” for Mr Abe, said Jun Iio, professor at the National Graduate Institute for Policy Studies, noting that thorny issues such as the restart of nuclear plants or moves to bolster Japan’s self-defence could have made a poll in 2015 or 2016 much more difficult.
“The general public understands that ‘better now than later’ is not a responsible political position,” he said.
Arguing that an election was needed to justify the tax delay was also “nonsense”, he said, as the original decision on the two-stage increase was based on a summer 2012 deal between the LDP, DPJ and Komeito and was one that could easily be changed by another round of three-party talks.
Analysts also said that any losses for the LDP could weaken Mr Abe’s position as party president, opening the door to challenges from rivals such as Seiko Noda, former head of the party’s main decision-making body.
“Most people in Japan are puzzled by the election,” said Jiro Yamaguchi, professor of political science at Hosei University in Tokyo. “They understand that it is only for Abe’s power.”
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