Komeito Party Open to Japan Tobacco Shares Sales to Rebuild

Source from:  Bloomberg Businessweek 10/10/2011

Japan's second-largest opposition party is open to the government selling some of its stake in Japan Tobacco Inc. to fund rebuilding from the March earthquake and nuclear disaster, signaling a willingness to compromise with Prime Minister Yoshihiko Noda's reconstruction plans. "We can accept selling some JT stock for reconstruction as the potential asset value is high," Natsuo Yamaguchi, head of the New Komeito party, said yesterday in an interview at his office in Tokyo. "But rapid sales of the entire stake should be debated cautiously to avoid confusion and damages to tobacco farmers and retailers." Noda's cabinet today approved the Democratic Party of Japan's plan to raise 9.2 trillion yen ($120 billion) through temporary tax increases. It also agreed to "consider" selling the state's holding of just over 50 percent in Japan Tobacco, amending the DPJ's proposal to do so over the next 10 years. Yamaguchi, 59, said his party favored reducing the government's share to one-third in the former tobacco monopoly. Noda's DPJ needs support from New Komeito and the main opposition Liberal Democratic Party to get the funding plan and a 12 trillion yen disaster aid package through the Diet. LDP lawmakers have expressed reservations about completely privatizing Japan Tobacco, something the company favors, saying it would reduce crop demand and hurt farmers. Japan Tobacco shares fell 1.4 percent to 358,000 yen today in Tokyo, trimming this year's gain to 18 percent. The government's stake is worth about 1.8 trillion yen. Tax Proposals The DPJ proposal calls for raising corporate taxes next April for three years, while income taxes will increase as of January 2013 for 10 years. Tobacco levies will go up next October, a measure Yamaguchi called "one option." He said relations with the ruling party have improved since Noda succeeded Naoto Kan as prime minister on Sept. 2, adding that the DPJ, LDP and New Komeito should be able to reach an agreement "soon" on the spending and tax proposals. "The sooner the better," Yamaguchi said. New Komeito's proposal for the third post-disaster stimulus is 16.5 trillion yen while the LDP is proposing 17 trillion yen. "The difference in numbers isn't that essential, and compromise is fully possible," he said. Enditem