In the latest sign of policy paralysis that has already prevented the appointment of a new central bank head, the government has failed to reach a deal on the tax with opposition parties that control parliament’s upper house.

The paralysis born of a divided parliament has sparked speculation that Fukuda’s ruling party might replace him ahead of a general election that could come this year — and analysts say public opinion will likely be the deciding factor.

No lower house election need be held until September 2009, and the ruling bloc is wary of a poll that would almost certainly see it lose seats, but pundits and politicians say the prime minister may be forced to seek a mandate to break the deadlock.

Fukuda is due to hold a news conference at 6 p.m. (0900 GMT).

Ending the 30-year-old “provisional” tax will cut 25 yen (25 cents) per litre, or around 17 percent, off the price of petrol for motorists who have been hammered by soaring world oil prices.

Consumers in Tokyo said they would welcome the cheaper price, but some questioned just how important the topic was. “Don’t they have better stuff to debate, such as general taxes?” said Hiroshi Yamada, a 28-year-old working in the advertisement business.

A weekend poll by the Asahi newspaper showed support for Fukuda languishing at 31 percent, close to the 30 percent rating seen by analysts as key to survival and about half the level the 71-year-old leader enjoyed when he took office last September.

The main opposition Democratic Party wants to abolish the tax, whose revenues are devoted to road construction.

It also wants to free up other revenue earmarked for roads for other purposes, arguing the system symbolizes the ruling Liberal Democratic Party’s wasteful spending on vested interests.

Fukuda last week unveiled a fresh proposal in an effort to break the deadlock, vowing to reallocate tax revenues earmarked for roads to general spending within two years.

But he has stood firm on the need to extend the gasoline tariff in the fiscal year from April 1 to avoid a 2.6 trillion yen (US$26 billion) revenue gap in national and regional budgets.

Control of the upper house means opposition parties can delay laws and veto appointments.

On Sunday, Fukuda, looking edgy and tired, again urged Democratic Party leader Ichiro Ozawa to meet him, but a senior opposition lawmaker said a summit should be more than mere show.

“We are ready to accept (an offer for a leaders’ meeting) anytime if such talks are meaningful,” Kenji Yamaoka said.

Subscribe to The China Post and save.  Click hereSharePrintEmail

Write a Comment

Enter your comments - 800 characters max

Receive China Post promos

Respond to this email