Yoshihiko Noda, finance minister of Japan, won his party’s election on Monday to head Japan’s ruling party. As such, he has become the likely successor to Naoto Kan, with the appointment expected as early as Tuesday. Noda has advocated raising taxes to finance reconstruction after the earthquake and nuclear disaster the country suffered earlier this year.
Bloomberg reported that Noda, who will be the country’s third prime minister in two years and the sixth in five years, has been outspoken in his support of raising taxes to pay the heavy expenses incurred in the wake of the Fukushima earthquake and its aftermath. He has also advocated a doubling of the sales tax to 10% by 2015. Kenichi Kawasaki, senior political analyst at Nomura Securities Co. in Tokyo, said in the report that Noda was “the most aggressive about tax increases among the candidates, so his win would fuel expectations that fiscal reforms will progress. That would be supportive to the bond market.”
Less than a week ago, as reported by AdvisorOne, Moody’s Investors Service cut Japan’s credit rating one step to Aa3, citing the country’s political situation and weak economic growth prospects. After the downgrade, Kan stepped down as head of his party, and promised to leave office as well.
Noda faces some stiff challenges in his new post. Reuters reported that it is questionable whether he will be able to muster sufficient support to push through policies that will have enough of an effect on the country’s current troubles, both economic and physical.
Jeffrey Kingston, director of Asian Studies at Temple University’s Japan campus, was quoted saying, “Noda has inherited all the same problems—a divided parliament, a divided party, a strong yen, a Tohoku (northeastern Japan) desperate for progress on reconstruction and an early end to the nuclear crisis. I think the honeymoon will be very short-lived.”