Paul Midford wrote:

> I don't think raising this tax is
>nearly as unpopular as some on

> this forum seem to think. In a recent NTV poll, a
razor thin
majority

> of 50.4% opposed raising the tax (versus 36% who
support raising
the

> tax, the rest being undecided).

RK:

Firstly, I take note of comments by Paul and Greg Noble that Noda's approval rating, while low, is not as bad as some other recent PMs. It's puzzling. And we'll have to see the impact, if any, of the territorial disputes.

A July 30 Nikkei poll with similar overall results to the NTV poll showed the division among parties. Among DPJ supporters, 64% were for the tax hike with 30% against. Among LDP supporters, opinions were equally divided at 45%. But, among those who don't support any party, and whose votes will tip the balance in the election, only 30% supported the bills; 57% were opposed. So, Noda could lose votes among opponents while not gaining new votes among supporters.

Meanwhile, the share of voters who support no party rose to 32%. That's the highest level since Nikkei's surveys on this began in 1987. That tops the 27% for the LDP and 18% for the DPJ. Presumably a goodly portion of these are for the prospective Hashimoto party. We could easily have a repeat of the 2010 UH election in which, at least in the PR segment, both the DPJ and LDP lose votes to anti-tax (and anti-nuclear?) parties. As for the single seat districts, I agree with Paul that it partly depends on the ability of the party to field (and recruit from other parties) strong candidates. But 2005 and 2009 showed that SMD seats are a lot less safe for incumbents than they used to be; in a growing number of SMDs, the party and policy matters more than the individual candidate and local interest group support.

If the LDP-Komeito wins big, but fails to cobble together a majority through assorted defections and needs a coalition, it will be interesting to see whom they ally with. Some (like Shinzo Abe and Heizo
Takenaka) talk of a coalition with Hashimoto; others say that most LDP leaders hate him (including comparisons to Hitler) and would rather make the DPJ (or parts thereof) a junior partner. If they did try to ally with "third force" parties, how would the LDP respond if the latter demanded a de facto repeal or delay of the tax hike?

As for the idea that voters support raising the tax in the abstract but not Noda's tax, the same thing was true in 2010. It would not be the first time that voters support seemingly contradictory ideas. According to the Yomiuri, in a June 19 meeting of party leaders--even after polls showed an abrupt plunge of 10-18% percentage points in Kan's approval since he vowed an early tax hike--Kan and his colleagues still told themselves that they would gain voter support by showing themselves more fiscally responsible than Hatoyama. They pointed to polls showing that a majority of voters supported an eventual tax hike. At the time, my comment on this logic was: the voters feel about the tax hike the same way that the young St. Augustine famously felt about chastity: "Lord, make me [fiscally] chaste, but not yet."

By the way, to get the tax hike through the Diet, Noda acceded to the LDP's demand to put to a separate vote (one never held) a proposal for a taxpayer ID. The Finance Ministry once calculated that the ID would eliminate so much tax evasion that it could raise as much money as a 5 percentage point hike in the consumption tax.

One final question to Paul. If you don't mind, can you tell us whether you are for or against the tax hike on economic grounds? I'm asking because I'm trying to test my suspicion that pro-tax analysts unconciously tend to give greater weight to evidence showing low political cost while while anti-tax analysts like me unconsciously do the opposite. Let me be clear: I am not accusing anyone of acting like a lawyer. I am saying that we are subject to unconscious and somewhat unavoidable cognitive biases, and that the best cure, at least for me, is the challenging dialogue that SSJ provides.

Richard Katz
The Oriental Economist Report