Gov`t to set up body to draft budget, form policy on tax reform

TOKYO, July 19 Kyodo -
The government and the ruling Democratic Party of Japan plan to set up a new
organization within the Cabinet Secretariat to draft the budget for fiscal 2011
and formulate a basic policy on reforming Japan's taxation system, according to
political sources.
The body, to center on Chief Cabinet Secretary Yoshito Sengoku, is expected to
compile the budget for the year starting next April and will effectively
replace the National Policy Unit, whose role is set to be redefined.
The unit, set up after the change of power last year in an attempt by the
DPJ-led government to strengthen its policymaking functions and lay out a broad
vision for state budgets and other key national policies, is seen to have
limits in its current situation.
The government and the DPJ have determined that a new organization is necessary
to achieve political leadership in compiling the fiscal 2011 budget amid the
continuing deterioration of Japan's fiscal situation, the sources said.
The body is also likely to consider the issue of raising the consumption tax
rate, currently at 5 percent, according to the sources.
Prime Minister Naoto Kan called for discussing the sales tax to reduce the
public deficit during the campaign for the July 11 House of Councillors
election, a proposal that was initially blamed for the DPJ's defeat.
Despite hopes for the new body to allow the government and the DPJ to exert
stronger political leadership, it is unclear how effective the new body would
be as it will not be backed by a legal basis, similarly to the National Policy
Unit.
Finance Minister Yoshihiko Noda and DPJ policy chief Koichiro Gemba, who is
also state minister in charge of civil service reform, are also expected to
take part in the new organization, the sources said.
As for the National Policy Unit, Kan has said it will serve as a think tank
under the direct control of the prime minister.
Sengoku said earlier that the unit should return to its basic focus on
formulating medium- to long-term national strategies, instead of busying itself
with making day-to-day political arrangements.
The DPJ had hoped the unit would show that it possessed a greater capacity than
past governments to formulate important policies, depending less on the
country's powerful bureaucracy, but the role of the unit has not been clear.
==Kyodo