Negotiations at home and abroad | This Week in Japanese Politics

A mid-week update

Thank you for reading Observing Japan. This post is available to paid subscribers. “This Week in Japanese Politics” will be published for paid subscribers once or twice a week.

If you are looking for timely, forward-looking analysis of the stories in Japans’s politics and policymaking that move markets, I have launched a new service through my business, Japan Foresight LLC. For more information about Japan Foresight’s services or for information on how to sign up for a trial or schedule a briefing, please visit our website or reach out to me.

---

The rundown

Prime Minister Ishiba Shigeru delivers a message of congratulations to newly inaugurated US President Donald Trump on Tuesday, 21 January. Source: Prime Minister’s Office of Japan

The ruling parties are in talks with multiple opposition parties as they seek to line up support for the government’s budget ahead of the ordinary Diet session that opens on 24 January. A date is set for the Tokyo metropolitan assembly elections, a curtain raiser in June ahead of the upper house elections in July. Wage negotiations have opened between big business and organized labor as both agree that further wage increases are needed. In Washington, Foreign Minister Iwaya Takeshi met with new US Secretary of State Marco Rubio, as the Japanese government seeks to arrange a bilateral summit between Prime Minister Ishiba Shigeru and President Donald Trump; in Tokyo, Ishiba hosted his Laotian counterpart. All of this and more, including insight into the Japanese government’s efforts to prepare for the second Trump administration and Ichiro’s near-unanimous selection to the Baseball Hall of Fame.

Politics

With the Ishiba government needing at least one opposition party to give its support to its FY2025 budget, on Wednesday, 22 January the Liberal Democratic Party (LDP) and Kōmeitō resumed negotiations with the Democratic Party for the People (DPFP) on raising the income tax exemption – the so-called 1.03 million yen barrier – in the budget. The government’s draft budget only raises the barrier to JPY 1.23mn; the DPFP wants to raise the threshold to JPY 1.78mn. The two sides are at odds over how to fund the reform. Kōmeitō leader Saitō Tetsuo said following the talks that it will be difficult to go beyond JPY 1.5mn.

The ruling parties also talked with Ishin no Kai on Wednesday regarding the inclusion of its proposal to eliminate tuition fees for secondary education in the FY2025 budget, continuing talks that began earlier in the month. LDP policy chief Onodera Itsunori said that the ruling parties are receptive, not least because Ishin no Kai has offered suggestions for how to cover the estimated JPY 600bn price tag for the policy. The negotiations with Ishin no Kai have enabled the ruling parties to put more pressure on the DPFP, signaling that the DPFP’s leverage is not unlimited. Asahi reports that Ishiba held private talks with Ishin co-leader Maehara Seiji last month as the prime minister tries to leverage his cross-party relationships to govern.