Lower House of the Japanese Parliament on Tuesday passed a bill to hike sales tax exposing a split in the ruling party.
Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ), the main Opposition Liberal Democratic Party and its ally, the New Komeito party, voted for the bill which was passed by 363 votes to 96 in the House of Representatives.
But the voting caused embarrassment for DPJ, as its more than 50 MPs, including former party leader and power broker Ichiro Ozawa, voted against the legislation.
Earlier this month, Noda dropped five Ministers of his ten-month-old Cabinet, as demanded by the Opposition, in return for supporting the bill in the plenary session.
Japanese media had speculated that Ozawa could form a new political party, but the leader of DPJ's largest intraparty group clarified later in the day that he intends to stay with the ruling party for the time being.
With the support of the two main Opposition parties assured, the bill is expected to pass in the Upper House to become law.
Noda called on the Opposition for continued support of the legislation in the House of Councilors, where the ruling party lacks a majority. He vowed to press ahead with reforms.
Noda pledged at his traditional New Year's press conference to double the sales tax rate in two stages to ten percent by 2015 to help cut Japan's public debt and to fund rising welfare costs.
Renewed conflict within the ruling party, between supporters and adversaries of the tax hike, has left Noda's future in doubt, reports say. If 54 MPs quit DPJ, it will lose majority in the Parliament.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.