Revival of Bureaucratic Maneuvering under the Noda Cabinet : Who Pulled the Strings on Consumption Tax Hike in 2012?

Abstract

In 2012, for the first time in fifteen years in Japan, Prime Minister Yoshihiko Noda won the parliamentary approval to raise the countrys sales tax by 10 percent by 2015. Despite the widespread tensions, Noda had stated that he would stake his political life on the success of the policy. Nodas decision to raise the consumption tax breached the partys own manifesto and eventually caused the Ozawa-led forty-nine member faction to leave the DPJ in protest. In the end, the DPJ underwent a catastrophic defeat in the December 2012 election, ending its three years and three months in power. With all the disastrous results faced by Noda, why did he raise the consumption tax at the cost of his own political life? What was the underlying force that drove Noda to raise the tax and act out against his own political interests?

This study examines the influence of bureaucrats on Noda and their own capability, rationality, and strategies of approach and persuasion that pushed the consumption tax hike behind the scenes. The second chapter, as a background, includes literature reviews on the revolution of Japanese bureaucracy in the sequences of the administrative centered government to an executive centered government under LDP and finally to politician-led government under DPJ. In order to analyze the power of the Ministry of Finance (MOF), chapter three observes the internal factors such as the decision making processes in Nodas Administration and Cabinet lineup. This chapter further analyzes the external situation such as the Triple Disaster that struck Japan in 2011 and how MOF skillfully used this to persuade the public by controlling the media.

This thesis further examines how bureaucrats have actually obtained more influence in policy-making processes under the DPJ and Noda despite DPJs initial manifesto. Thus, chapter four analyzes various elements of the DPJ that bolstered the MOFs strategic approach and the revival of bureaucratic superiority within the policy-making process. In turn, this thesis argues that the consumption tax increase in 2012, the long-pursued goal of MOF, was possible precisely because it was under DPJ. In other words, starting from the changes in the incumbent party, the lack of expertise and knowledge, the confusion and instability of DPJs setting, its crisis in crisis management enabled bureaucrats to finally achieve their long sought after goal of a consumption tax increase.