Japan’s leader blames ruling party’s loss in elections on his tax hike talk but isn’t quitting

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Japan PM blames party loss on tax hike talk

TOKYO — Japan’s Prime Minister Naoto Kan is blaming his ruling party’s loss in parliamentary elections on his talk about possibly raising the sales tax — but says he isn’t resigning.

Exit polls showed that the ruling Democratic Party of Japan lost several seats in Sunday’s upper house election, indicating that the ruling coalition lost its slim majority in 242-seat chamber.

Kan apologized to voters who supported the Democrats on national television Sunday night.

Kan, who took office just a month ago, said that he felt he hadn’t sufficiently explained the need for a tax hike.

The Democrats’ grip on power isn’t at risk because they still control the more powerful lower house.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

TOKYO (AP) — Battered by voter backlash over the prospect of higher sales taxes, Japan’s ruling Democratic party suffered a heavy defeat in a parliamentary election Sunday, media exit polls showed, dealing a blow that could hinder the young government’s ability to control soaring debt.

The projected losses were worse than expected and will make it difficult for Prime Minister Naoto Kan’s government to effectively tackle serious problems confronting the world’s second-largest economy, from reining in its bulging deficit, reviving its stagnant economy and support a rapidly aging population.

The projected results indicate that the ruling coalition lost its 122-seat majority in parliament’s upper house. The election won’t directly affect the Democrats’ grip on power because they control the more powerful lower house of parliament.

But it does raise the serious prospect of gridlock.

“It’s bad news for Kan and the party, and its really bad news for the nation because it means there isn’t going to be resolute action on all the festering problems facing the government,” said Jeff Kingston, director of Asian studies at Temple University in Japan. “And that’s got global repercussions.”

A fiscal hawk and social progressive, Kan warned immediately after taking office last month that unless Japan took dramatic steps it could face a Greece-like fiscal crisis — a comparison experts say is exaggerated.

But his proposal to possibly double Japan’s 5 percent sales tax in coming years clearly hurt his party’s chances in the elections, where half the upper house’s 242 seats were up for grabs.

“It’s the taxes. Kan threw that out suddenly, and it really hurt them. It cost them the votes of women, and particularly housewives who look after family finances,” said Tomoaki Iwai, political science professor at Nihon University in Tokyo.

Public broadcaster NHK predicted that The Democratic Party of Japan’s party won between 43 and 48 contested seats in the upper house, down from 54 before the polls. Other TV stations made similar projections. Kan had set a target of keeping those 54 seats.

The Democrats’ tiny coalition partner, the Peoples’ New Party, got no seats, the exit surveys showed.

Official results were not expected until Monday.

Without new coalition partners — or a cooperative relationship with another party or two — the Democrats will likely face difficulties passing bills and pushing their agenda to cut government spending and put more cash in the hands of consumers.

Analysts said that Kan’s job appeared to be safe for now, but said that his leadership might be challenged at the party’s general meeting in September. Yukio Edano, Democratic party secretary-general, said the party is not considering resignation of any leaders until all the votes are counted.

The defeat is a stunning rebuke for the Democrats, who stormed to power last August amid high hopes for change and transparency in government, unseating the conservative Liberal Democratic Party that had ruled Japan for most of the post-World War II era.

But voters became disillusioned with the Democrats even before Kan brought up the tax hike issue.

While the Democrats scored points for freezing many public works projects viewed as wasteful, the public was sorely disappointed by former Prime Minister Yukio Hatoyama’s involvement in a funding scandal and his failure to keep a campaign promise to move a contentious U.S. Marine base off the southern island of Okinawa. Hatoayama quit last month.

“People are desperate for change and reform, and none of the parties are delivering,” said Kingston. “I think that they’re profoundly skeptical and disappointed. And that’s the message they sent tonight.”

The LDP, now the main opposition party, appears to have done better than expected, winning 48 to 50 seats, according to predictions. That would give them 81 to 83 seats in the chamber, up from 71 before the election.

A possible partner for the Democrats is the newly formed Your Party, made up of LDP defectors who champion smaller government. It was projected to win about nine seats, polls showed.

Kan saw his initially high support ratings drop after his tax hike proposal, prompting him to backpedal somewhat on the issue.

In the waning days of the campaign, Kan promised that any tax increase wouldn’t happen until after the next lower house election, which must be held within three years, saying he wanted a public mandate for any decision on taxes.

Japanese newspapers praised Kan in Sunday commentaries for being brave enough to bring up the possibility of higher taxes, but the damage appeared to have been done among voters who are struggling in a stagnant economy with high joblessness.

Democratic party officials acknowledged the tax issue had hurt the party badly.

“The way Prime Minister Kan brought it up was a little bit abrupt, and in the beginning we had a slight discordance within ourselves,” said Goshi Hosono, a Democratic party lawmaker.

Analysts called the election a protest vote against the ruling party, but not necessarily a vote for the opposition.

“People had very high hopes of the Democrats, and they feel betrayed,” said Iwai, from Nihon University. “They wanted cleaner politics, and there were money scandals.”

He also said it would be difficult for the Democrats to push through with its agenda.

“I think we are looking at a very complicated situation ahead,” Iwai said.

Associated Press Writer Eric Talmadge and Malcolm Foster contributed to this report.