Prime Minister Noboru Takeshita won a major victory Saturday when parliament's upper house voted his controversial tax reform package into law, paving the way for the first overhaul of Japan's postwar tax system.
Takeshita's Liberal Democratic Party used its commanding parliamentary majority to pass the package, which introduces a 3 percent sales tax and cuts corporate and upper-level income taxes.Strong public and political opposition stopped several previous tax reform attempts in the past 10 years.
Takeshita, who had set tax reform as his top priority, bowed deeply to the chamber after its approval and moved quickly to allay fears.
"I am well aware . . . that there are fears and anxieties among the people about the new tax system," he said. "The reform has laid the foundation for a prosperous aging society, and for sustaining the vitality of Japan's economy and society."
Takeshita vowed not to increase the sales tax above 3 percent through the remainder of his term, which ends next fall. Opposition parties had raised concerns that the government would raise the rate to increase revenues.
Takako Doi, who leads Japan's largest opposition group, called the legislation "defective" and said her Japan Socialist Party would continue to demand the resignations of the Takeshita Cabinet and the dissolution of Parliament.
The laws cut taxes for corporations and higher wage-earners, but the tax burden of lower-income families is expected to increase.
The measures constitute the first major overhaul of the tax system drafted by U.S. occupation authorities after Japan's World War II defeat.
Passage of the bills followed five months of deliberations that were interrupted by frequent opposition boycotts after disclosures that top politicians, including aides to Prime Minister Takeshita and former Finance Minister Kiichi Miyazawa, had profited from questionable stock dealings.
Within minutes of the vote, Takeshita appointed a new finance minister, Tatsuo Murayama, one of the architects of the tax reform. Takeshita had been acting finance minister since Dec. 9, when Miyazawa resigned after being linked to the scandal.