JAPANESE MORNING PRESS HIGHLIGHTS 04//06

UNCLAS SECTION 01 OF 12 TOKYO 002298

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS
OFFICE; SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 04//06


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

USFJ realignment sticker shock:
4) Government shocked by Pentagon estimate of 3 trillion yen
($26 billion) that Japan must pay for USFJ realignment costs
5) On 3-trillion yen realignment cost, Prime Minister Koizumi
says US paying heed to domestic opinion that feels Japan should
bear more for its defense
6) Disharmony in government between finance, foreign ministries
and JDA over how to pay the cost of USFJ realignment
7) Japan's cost of USFJ realignment could go up depending on
exchange rate fluctuations
8) Legislation needed to pay for USFJ realignment may not make
it through the Diet this session
9) Japan Communist Party, Social-Democratic Party balk at Japan
paying 3 trillion yen for USFJ realignment

Other defense issues:
10) Upcoming 2-plus-2 meeting in Washington may decide to revise
the US-Japan defense cooperation guidelines
11) Full reversion of four US bases in Okinawa to be included in
final report on USFJ realignment
12) Next GSDF unit readying for rotating to Iraq starting next
month

13) Sakie Yokota, mother of girl abducted by North Koreans,
meets Deputy Under Secretary of Defense Lawless in Washington

14) South Korea setting up special team to deal with the
Takeshima (Dokdo) island dispute with Japan

15) LDP's Taku Yamasaki in meeting with senior Chinese party
official hears familiar litany on Prime Minister Koizumi's
Yasukuni Shrine visits

16) Columbia University Professor Curtis asks Koizumi in dinner
meeting whether the next prime minister will be popular or a
populist

Economic agenda:
17) Afraid of impact on Upper House election next summer, LDP
tax panel decides to postpone plan to hike consumption tax
18) METI nationwide questionnaire finds public split on social
disparity issue

Articles:

1) TOP HEADLINES

Asahi:
Fraud case to be established against Huser President Kojima on
suspicion of selling condos while hiding defects; Crime of
omission to be applied

Mainichi:
eHomes employees aware of sloppy inspection; No check carried out
on earthquake resistance data


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Yomiuri:
Japan, US to review Defense Guidelines to improve international
cooperation

Nihon Keizai:
Government, TSE to make listing of Asian stock easier; Ban on
depository receipts to be lifted

Sankei:
USFJ realignment; Japan's share comes 3 trillion yen, giving
shockwave to government

Tokyo Shimbun:
Former Architect admits earthquake-resistance data fraud; Lent
name to earn income

2) EDITORIALS

Asahi:
(1) Earthquake-resistance data fraud: Get to the bottom quickly
(2) Chernobyl: Too late once an accident occurs

Mainichi:
(1) Earthquake-resistance data fraud: Ferret out the truth
(2) Prime Minister Koizumi marks fifth anniversary: Is he
dispirited?

Yomiuri:
(1) Arrests in earthquake-resistance data scandal: Eliminating
this common practice
(2) Relations between Japan and EU: Strengthen dialogue on East
Asia

Nihon Keizai:
(1) Problem of heavily indebted people cannot be settled by
lowering interest rates
(2) Needed: An Investigation to shed light on the earthquake-
resistance data scandal

Sankei:
(1) Arrests in quake-resistance data scam: Shed light on key
suspicions
(2) Chernobyl: Learn the lessons of the accident

Tokyo Shimbun:
(1) Arrests of those involved in condo scam: Thorough
investigation needed to shed light on core issues
(2) Criminal investigation into bid-rigging: Use new methods to
find out what happened

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, April 26

NIHON KEIZAI (Page 2) (Full)
April 27, 2006

08:05
Met Deputy Chief Cabinet Secretary Suzuki at Kantei.

09:00
Attended an Upper House Administrative Reform Special Committee

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meeting.

11:58
Returned to Kantei.

13:00
Attended the Upper House Administrative Reform Special Committee
meeting.

17:16
Met at Kantei with Chief Cabinet Secretary Abe and his deputy
Futahashi, followed by Economic and Fiscal Policy Minister
Yosano.

18:28
Attended Keizai Doyukai's 60th anniversary party at the Japan
Industrial Club in Marunouchi.

19:01
Dined at a Japanese restaurant in Akasaka with Columbia
University Prof. Gerald Curtis, joined by actress Megumi Okuna.

22:19
Returned to his residence.

4) Gov't shocked at 3 trillion yen for Japan's cost sharing of
USFJ realignment

SANKEI (Top play) (Full)
April 27, 2006

Japan's burden of cost sharing for realigning US forces in Japan
is estimated at approximately 3 trillion yen. This estimated
amount of money, shown by US Deputy Under Secretary of Defense
Lawless in his recent remarks, shocked the Japanese government.
"It's tremendous," Chief Cabinet Secretary Shinzo Abe said. "It's
probably out of consideration for (US) public opinion," Prime
Minister Junichiro Koizumi told reporters yesterday evening in
trying to calm the shock. However, the figure in terms of 3
trillion yen could have wings without a specific estimate of
costs. It will likely become a major point of contention in the
Diet during the latter half of its current session.

"If we fail to agree now, this task may be carried over to the
next government. If that is the case, Japan may not be able to
ensure its cost sharing for Guam relocation." With this, the
Japanese government urged the US government to make concessions
in their talks over the cost of moving US Marines from Okinawa to
Guam. Koizumi's term will be up in September. A government
official therefore suggests the need for the Koizumi government
to pave the way to legislating and budgeting the realignment of
US forces in Japan. "Otherwise," the official added, "the next
government won't last."

The government is walking a tightrope in its time schedule. In
early May, the government is scheduled to make a cabinet decision
to adopt a plan to relocate the US Marine Corps' Futenma Air
Station to a coastal area of Camp Schwab. Shortly thereafter, the
government will present a time-limited package of special
legislative measures to the Diet for its approval of Japan's
fiscal assistance to the US military's realignment in Japan.


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The legislation is to package fiscal measures for Guam relocation
and base realignment in Japan. When it comes to Guam relocation,
the bill will allow the Japan Bank for International Cooperation
(JBIC) to make investments or lend money for infrastructure
construction, such as power supply and sewerage, in addition to
housing construction. It also features subsidies for base-hosting
municipalities accepting realignment plans.

However, the opposition will likely call for the government to
show the grounds for the 3 trillion yen. "We must be
theoretically armed to the bone, or the Japan-US alliance may be
upset," a senior official of the Foreign Ministry says.

Lawless estimated Japan's share of base realignment costs at 20
billion dollars. That is because there is the Japan-US Status of
Forces Agreement (SOFA),which, under the Japan-US Security
Treaty, stipulates the status of US military personnel stationed
in Japan and governs base management and operations. SOFA Article
24, for example, stipulates that Japan provides US forces with
facilities in Japan without cost to the United States.

In addition, Japan also bears US military training relocation
costs and utilities in conformity with a special agreement to
shoulder the burden of expenses for the stationing of US forces
in Japan with its omoiyari yosan, literally "sympathy budget," or
host nation support (HNS). The Japanese government has earmarked
232.6 billion yen in its HNS budget for the current fiscal year.

However, the cost of Futenma airfield's relocation is unclear in
itself. The government will also need to estimate specific costs,
such as billeting for US military personnel and housing for
family dependents in the process of realigning US military bases
in Japan. "Even if we're asked to show the breakdown of costs, we
can't answer right away," says one in charge of negotiations with
the US government.

In the meantime, the Defense Agency estimates the total cost of
the US military's realignment in Japan at 2.3 trillion yen,
including the cost of Guam relocation. The agency also deems it
possible to reduce the cost. One of the agency's officials is
upset at Lawless's mention of Japan's share, saying, "He just
talked about an estimate at this point."

The Defense Agency is seeking to handle base relocation in a
separate budget slot apart from defense spending as in the case
of outlays related to the Japan-US Special Action Committee on
Facilities and Areas in Okinawa (SACO). For one thing, if the 3
trillion yen is slotted in the defense budget, the agency will
need to substantially cut back on the Self-Defense Forces'
budget.

However, the Ministry of Finance will not approve a separate
budget slot. "The Defense Agency's budget request is related to
defense spending," a ministry source says. If the ministry's
standpoint passes muster, the agency will inevitably have to
scale back on the current midterm defense buildup plan for five
fiscal years from 2005 through 2009 when reviewing it next fiscal
year, as it does not anticipate fiscal disbursements for the US
military's realignment in Japan.

At the time of the 1991 Gulf War, the government implemented an
ad hoc tax increase in order for Japan to outlay 9 billion

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dollars in assistance to the multinational force. However, it
would be difficult to carry out a tax hike with a House of
Councillors election scheduled for the summer of next year. The
Koizumi government will shoulder a heavy burden in its closing
days.

5) Koizumi: Lawless gave consideration of US public opinion in
making statement

TOKYO SHIMBUN (Page 2) (Full)
April 27, 2006

In reaction to US Deputy Under Secretary of Defense Richard
Lawless' announcement that Japan's share for the realignment of
US forces in the country would come to 3 trillion yen, Prime
Minister Junichiro Koizumi indicated that it was a domestic
message, saying, "I think he made the comment in consideration of
US public opinion that Japan's burden is too light in comparison
to the United States' responsibility for the defense of Japan."

Koizumi was speaking to reporters at his official residence.

6) Discord obvious in government over sharing of cost of US force
realignment; Finance Ministry, MOFA call for disbursing money
from defense budget

MAINICHI (Page 2) (Full)
April 27, 2006

US Deputy Defense Undersecretary Richard Lawless, the responsible
official on the US side for talks on the realignment of US forces
in Japan, announced on April 26 that Japan would pay an estimated
26 billion dollars or about 3 trillion yen to help implement the
overall realignment. In response, discord is coming to the
surface in the government over the size of Japan's share and the
fiscal resources to pay for it. Some officials have reacted
fiercely to the fact that the Defense Agency (JDA) engaged in
negotiations with the US without fully coordinating views with
the Finance Ministry and the Ministry of Foreign Affairs (MOFA).
Given such dissatisfaction, they are forming an encircling net
around JDA to place the responsibility for the current situation
on it. A one senior MOFA official said, "The cost naturally
should be covered within the framework of the defense budget."

Prime Minister Junichiro Koizumi said last night: "The US
supposedly gave the numerical figure out of consideration to the
domestic public opinion criticizing that Japan's burden is overly
light despite the US efforts to protect Japan in a responsible
manner."

As part of the overall US force realignment cost, Japan and the
US have agreed on Japan's sharing of 6.09 billion dollars of the
10.27 billion dollar cost to relocate Okinawa-based Marines to
Guam. According to what Lawless announced, it will cost about 20
billion dollars more or approximately 2.3 trillion yen to realign
US military bases in Japan, including the relocation of Futenma
Air Station and the carrier-based aircraft.

In a speech on April 24, JDA Administrative Vice Minister
Takemasa Moriya also gave a numerical figure close to the 20
billion dollars. He said:


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"Excluding the Guam transfer cost, we estimate 2 trillion yen
will be needed over eight years or 260 billion yen annually.
Japan has disbursed 600 billion yen (annually for US forces in
Japan, including "sympathy budget" allocations),so Japan will
have to shoulder a total of 860 billion yen a year."

JDA, by emphasizing the huge sum of Japan's share of the
relocation cost, is apparently aiming to urge the government to
set an account separate from the defense budget.

But the Finance Ministry has reacted to JDA, a senior official
remarking: 'I wonder why such a large sum of money is needed.
That is the figure the government presented while keeping the
reactions in the US Congress in mind." Administrative Vice
Finance Minister Koichi Hosokawa said in a press conference: "The
cost should be included in defense-related expenses." Chief
Cabinet Secretary Shinzo Abe said at a press conference: "It's my
impression that it is an incredible sum of money. We will look
into the content of the reported figure." On budgetary measures,
Abe indicated that he would carefully watch coordination work
between the Finance Ministry and JDA.

7) Japan's share in USFJ realignment cost; Exchange rate will not
be fixed, taking sharp exchange-rate fluctuations into account

NIHON KEIZAI (Page 2) (Excerpts)
April 27, 2006

Now that the sharing of the USFJ realignment cost between Japan
and the US has been fixed, the government will promptly take
necessary measures. For a start, it will consider making an
arrangement with the US side in order to avoid losses from
exchange-rate fluctuations. In the meantime, with a view to
securing 3 trillion yen to cover Japan's share, the Defense
Agency will call on the Ministry of Finance (MOF) to set up a
separate budgetary framework from the regular defense budget.

Fluctuations in exchange rates will affect the dollar-denominated
cost of relocating Marines in Okinawa to Guam. Japan has agreed
to pay 6 billion dollars (approximately 710 billion yen) for the
relocation. The plan most likely to be adopted is to stipulate
that the exchange rate for December, when Japan's state budget is
compiled, be used and to hold talks with the US if exchange rates
greatly fluctuate.

The realignment will not be completed before fiscal 2012, even if
it proceeds well. The government therefore has judged that fixing
an exchange rate for the next six years at this point would
involve a great exchange risk. Provided that the 6 billion
dollars are set in dollar terms, Japan's burden would increase by
approximately 60 billion yen, if the depreciation of the yen
against the dollar advances by 10 yen.

8) Government to introduce legislation to finance 3 trillion yen
in Japan's share of total US force realignment cost

ASAHI (Page 2) (Full)
April 27, 2006

The government will soon start work to submit to the Diet a "Bill
Related to US Force Realignment in Japan" (tentative name) as the
basis for Japan to disburse money to bear part of the cost to

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relocate Okinawa-based Marines to Guam. The bill will include
measures to create a fund to help promote the economies of base-
hosting communities. Amid priority given to the Japan-US
agreement, however, coordination work in the government over
fiscal resources to finance Japan's share, which has been
estimated at 3 trillion yen by the US government, has been put on
the backburner. It remains to be seen if the legislation will be
enacted during the current Diet session.

The Japanese government has envisioned a scenario in which Japan
and the US will complete a final plan at the two-plus-two top
security meeting of defense and foreign ministers in early May
and that the results of realignment talks will be played up
during a meeting between Prime Minister Koizumi and President
Bush planned after the end of the current Diet session.

The government is also aiming to submit and enact bills related
to US force realignment in the current Diet session. As for
budgetary measures, the government intends to make arrangements
to earmark the budget in fiscal 2007 or later.

On the details and fiscal resources of Japan's share, however, "a
scheme has yet to be firmed up," according to Defense Agency
(JDA) Director General Nukaga. It seems that it will take
considerable time for coordination between the Finance Ministry,
which is eager to cut expenditures, and the JDA, which is calling
for a separate account from the defense budget.

If regional promotion measures and a subsidy system for base-
hosting communities are included in the bills, their submission
will likely be delayed. That is because Okinawa Prefecture has
yet to agree on modifications to the current Futenma relocation
plan.

Meanwhile, the Ozawa-led Minshuto (Democratic Party of Japan) has
lashed out at the government, claiming: "Questions have been
raised about the stance of the Koizumi administration, the
government, and the Liberal Democratic Party, which will use
taxpayer money (in response to demands by the US)." If the
government decides to pay a large sum without specifying a
timeframe for relocating Marines to Guam, Diet deliberations will
inevitably fall into chaos.

9) JCP, SDP criticize Japan's share for US force realignment as
outrageous

TOKYO SHIMBUN (Page 2) (Full)
April 27, 2006

Japanese Communist Party (JCP) Executive Committee Chairman Kazuo
Shii criticized yesterday a US defense deputy under secretary's
statement that Japan's share of the realignment of US forces in
Japan would run to 3 trillion yen, saying, "The sum is
outrageous. It is unreasonable to disburse Japan's tax money for
building facilities in Guam to enhance the US military." Shii was
speaking on a CS Asahi Newstar program.

Social Democratic Party (SDP) head Mizuho Fukushima also told a
press conference, "Why does Japan has to bear such a large share
while saying that the country would aim for a small, effective
and simple government?"


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About the question of improving the law connected with disbursing
funds, Fukushima also said: "It is preposterous to ram
legislation through the Diet to impose a burden on the people
just because the government promised the United States.
Democratic principles of finance have been broken."

10) Japan, US to decide at 2-plus-2 meeting to revise defense
cooperation guidelines to expand international cooperation;
Possibility of Japan passing permanent law allowing SDF overseas
dispatches

YOMIURI (Top play) (Excerpt)
April 27, 2006

The Japanese and US governments have set a policy course for
revising the current set of defense cooperation guidelines and
have now entered the final stage of coordination. The current set
of guidelines focuses on cooperation between the Self-Defense
Forces (SDF) and the US forces in the event of an emergency in
the areas surrounding Japan, but now, based on changes in the
international situation, the bilateral cooperation will be
expanded to include global-scale international peacekeeping
activities, including responding to the war on terror, and
missile defense. Coordination is going forward so that agreement
on revising the guidelines can be reached by the Japan-US
Security Consultative Committee (2-plus-2) consisting of the
foreign and defense affairs-related cabinet ministers of both
countries, who will meet in early May. The Japanese government
intends to link the guideline revision to other efforts,
including permanent legislation allowing the overseas dispatch of
the SDF. The proposal has been floated to have a new Japan-US
security declaration issued by Prime Minister Koizumi and
President Bush at their summit in June.

11) US force realignment: US to totally return four Okinawa
bases; Final report outlined

TOKYO SHIMBUN (Page 1) (Excerpts)
April 27, 2006

The Japanese and US governments outlined yesterday their final
report on US force realignment for release in early May. The
report incorporated a plan to completely return some US base
facilities, such as Naha Naval Port facilities in southern
Okinawa, in addition to what was specified in an interim report
last year.

The US will totally return the following four facilities in
Okinawa, home to over 70% of the US bases in Japan: Futenma Air
Station, which is already specified in the interim report, Naha
Naval Port facilities, Makiminato Service Area, and Camp Kuwae.
The US will return a total of 1,500 hectares of land, including
two facilities at Camp Zukeran and another place that will be
returned partially. This corresponds to a mere 6% of the total US
military facilities and areas in Okinawa (23,680 hectares). But
the government is insisting that this will help tremendously
reduce burdens on populous areas.

An agreement has also been reached to build two runways in a V
shape on the coastline of Camp Schwab in Nago to replace Futenma
Air Station. Aerial refueling planes will also be relocated from
Futenma Air Station to the Iwakuni base in Yamaguchi and the Air

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Self-Defense Force's (ASDF) Kanoya base in Kagoshima.

Main points in the final report

Return 1,500 hectares of land, including Naha Naval Port
facilities in southern Okinawa.

Construct two runways in a V shape at Camp Schwab.

Move 8,000 Marines from Okinawa to Guam. Japan is to bear 59% of
the relocation-related cost.

Relocate part of fighter training from US Air bases to five ASDF
bases.

Return part of Sagami Depot measuring 17 hectares.

Continue talks on air traffic control held by Yokota Air Base.

12) Final coordination underway for dispatching 10th GSDF
contingent to Iraq in May

ASAHI (Page 2) (Abridged slightly)
April 27, 2006

The government has begun coordination to issue an order possibly
next week for dispatching the 10th Ground Self-Defense Force
(GSDF) contingent to the southern Iraqi city of Samawah. With the
designation of a new prime minister by the Iraqi parliament, a
plan had surfaced at one point to end Japan's assistance with the
9th contingent that would stay in the country until the end of
May. But the government has concluded that it would take time to
form a cabinet and transfer security authority to Iraq. The
government plans to make arrangements for a withdrawal while the
10th contingent is in Iraq until August.

According to a government source, once an order is issued,
members of the 10th contingent would leave for Iraq starting in
early May. It would be difficult to begin withdrawing troops from
Samawah before late May. As it is said that a withdrawal usually
takes two months, a GSDF pullout would not be completed until
late July.

Now that Jawad al-Maliki has been named new Iraqi prime minister,
the government determined that the "political process" - the most
difficult condition of four requirements for a pullout -- has
been met. "Chances have emerged for the establishment of a new
Iraqi administration before the end of this month and the release
of a program on transferring security authority," a Foreign
Ministry official said. The ministry began exchanging information
with Britain and Australia this week.

But according to the ministry, the cautious view is strong in the
two countries that they should watch the political process.

Some Japanese government officials also called for the
termination of Japan's assistance with the 9th contingent. But
calls for a rotational contingent outgrew them.

13) Sakie Yokota, mother of abducted Megumi, shakes hand with
Deputy Defense Undersecretary Lawless


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SANKEI (Page 1) (Full)
April 27, 2006

By Sho Nakamura, Washington

Members of a group of the families of the missing Japanese
abducted by North Koreans, including Sakie Yokota, mother of
Megumi Yokota, who was abducted at the age of 13, met on April 26
at the US Defense Department with Deputy Secretary of Defense
Gordon England and other officials. Deputy Undersecretary Richard
Lawless welcomed them, receiving and sending them off in front of
the Pentagon building. He wore a blue ribbon, a symbol of efforts
to rescue the abductees from North Korea.

14) South Korea sets up task force to strengthen claim on
Takeshima (Dokdo) islets; likely to propose seafloor topography
names in June

ASAHI (Page 3) (Excerpts)
April 27, 2006

By Tadanao Takatsuki, Seoul

South Korean Foreign Affairs and Trade Minister Ban Ki Moon
revealed yesterday that his ministry would launch a task force to
strengthen its claim on a group of South Korea-controlled islets
in the Sea of Japan, known as Takeshima in Japan and Dokdo in
South Korea, in response to a special statement released the day
before yesterday by President Roh Moo Hyun. Regarding South
Korea's agreement with Japan to delay its plan to name seafloor
topography near the disputed islets, First Vice Foreign Minister
Yoo Myung Hwan stated in the parliament that South Korea might
propose its naming plan to an international conference in June if
all preparations were made.

Foreign Minister Ban said that the Takeshima (Dokdo) issue, which
was handled by the Asian and Oceanian Affairs Bureau, would be
transferred to the special task force team headed by a vice
minister-level official. A number of experts will work for the
task force. Working-level officials will work on specific
operations, according to Ban.

Following Roh's statement, many ruling and opposition party
members are now calling on the government to present concrete
measures to resolve the issue. In response to these domestic
calls, the setting up of the task force on Takeshima seems to
have decided.

However, the view is that if the confrontation with Japan
intensifies, South Korea, which effectively controls the islets,
will find itself on the horns of a dilemma since the
international community will know that the territorial dispute is
still going on between the two countries.

15) In meeting with LDP's Yamasaki, China's National People's
Congress Standing Committee Chairman Wu criticizes Prime Minister
Koizumi's visits to Yasukuni Shrine

MAINICHI (Page 5) (Full)
April 27, 2006

By Nariyuki Tanaka, Beijing

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Taku Yamasaki, former vice president of the ruling Liberal
Democratic Party, met yesterday in Beijing with Wu Bangguo,
chairman of the Standing Committee of China's National People's
Congress. During the meeting, Wu criticized Prime Minister
Junichiro Koizumi's visits to the controversial Yasukuni Shrine,
noting, "Visits to Yasukuni Shrine by a political leader have
damaged (our bilateral relations)." Yamasaki only responded, "We
would like to come up with measures to resolve the issue."
Yamasaki met also with Vice Foreign Minister Wu Dawei, who told
Yamasaki that he would soon visit the United States to discuss
North Korea's refusal to return to the six-party talks.

16) Prof. Gerald Curtis tells Prime Minister Koizumi, "Next prime
minister may be a populist"

MAINICHI (Page 5) (Full)
April 27, 2006

Prime Minister Junichiro Koizumi dined yesterday with Gerald
Curtis, professor at US Colombia University, at a Tokyo
restaurant. Curtis told Koizumi: "You are popular but not a
populist. Chances are that the next prime minister will be a
populist but not popular."

17) LDP tax panel likely to put off consumption tax hike,
possibly to fiscal 2008, with Upper House election in mind

ASAHI (Page 1) (Excerpts)
April 27, 2006

The Liberal Democratic Party's (LDP) Research Commission on the
Tax System decided to review the consumption tax rate in a
revision of the tax system in fiscal 2007. But the possibility is
growing stronger that the review will be deferred to fiscal 2008,
reflecting growing concerns in the LDP about a negative impact on
the House of Councillors next year.

Fumiaki Ibuki, the subcommittee chairman of the LDP tax panel,
said in a meeting of the Japan Business Federation (Nihon
Keidanren): "Taking the current situation into consideration, it
will be impossible to change the rate of the consumption tax in
fiscal 2007." Tax panel Chairman Hakuo Yanagisawa also said: "It
would be difficult in fiscal 2007. But we must carry it out in
fiscal 2008." If a plan to raise the consumption tax is included
in the tax reform plan for fiscal 2008, the rate will be hiked
sometime from the fall 2008 through the spring 2009, at the
earliest.

18) Views of "social divide" split in METI poll; 46% call for
correction; 47% acknowledge disparity as result of effort

YOMIURI (Page 9) (Full)
April 27, 2006

The Basic Policy Panel of the Ministry of Economy, Trade, and
Industry's (METI) Industrial Structure Council, an advisory panel
reporting to METI, conducted a poll on the "social divide" and
released results yesterday. The poll found that the number of
those who called for the correction of the disparity and the
number of those who were positive about such a disparity were
even.

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To a question about income disparity, a total of 46.7% of pollees
replied, "Such a disparity should be corrected a little more" or
"It must be corrected." A total of 47.6% made positive replies,
such as "The disparity is the result of differences in ability
and effort" or "It is necessary as an incentive."

The poll also asked why pollees feel that economic disparity is
widening, allowing multiple replies. The largest portion of 45%
noted, "Those who are earning high income, such as a handful of
entrepreneurs, have increased," followed by 42% , who replied,
"The number of those whose income dropped has increased due to
industrial restructuring or bankruptcies."

The poll targeted people aged 20 and over, and received 5,100
replies from all over the country.

DONOVAN