Japanese motorists reap fuel windfall

"CRISIS, what crisis?" Japanese motorists might be forgiven for asking as the latest manifestation of the country's political deadlock cuts their petrol costs at a stroke by 17 per cent or more.

As of first thing yesterday morning, a "provisional" petrol tax lapsed because the opposition-controlled upper house of the Diet had refused to renew it and the cost of a litre of regular fuel at many Tokyo outlets dropped immediately from about Y150 ($1.63) to Y1.25 or even Y1.17.

Some service stations did heed the urgings of Transport Minister Tetsuzo Fuyushiba to delay passing on the tax cut to motorists - they were the establishments without long queues of cars to be filled-up yesterday.

It won't last. On April 29, once the bill enabling the petrol tax extension has been stalled in the upper house for 60 days, Yasuo Fukuda's Government can use its two-thirds majority in the House of Representatives to ram it through.

But in the meantime, the national budget will have lost an estimated Y120 billion in revenues from the tax's absence.

For the same period, US forces in Japan will be without the Japanese "host nation support" payments, which subsidise the wages of civilian employees at American bases and charges for services including water and electricity.

The upper house is also blocking a budgeted payment of Y208.3 billion to the US military. This too will be overridden by Mr Fukuda's Government at the end of the month.

However, Mr Fukuda's problems will not end there. His already unpopular government looks certain to suffer another nasty backlash when it re-imposes the petrol tax.

That is why the Transport Minister was encouraging petrol station proprietors not to pass the windfall on to motorists.

To make matters worse, MrFukuda's Liberal DemocraticParty faces a by-election inYamaguchi prefecture on April27 which the opposition will seek to turn into referendum on the petrol tax.

Japanese voters have several times previously punished the LDP heavily for tax increases.

At yesterday's cabinet meeting, the Prime Minister urged his colleagues to get out there "to give the people full explanations about the necessity of the extra gasoline tax".

The current legislative blockade has been spearheaded by the Democratic Party of Japan, which won big in the upper house election last July.

This contributed to the swift downfall of then prime minister Shinzo Abe and has made the past six months a misery for 71-year-old Mr Fukuda, who took over the reins in September, as the DPJ seeks to force his government to an early general election.

Though the constitution allows Mr Fukuda's coalition to use its House of Representatives "super-majority" to override the upper house veto, Mr Fukuda's Government has found this procedure awkward in practice.

Even Mr Fukuda has conceded, by promise if not yet deed, that the provisional petrol tax is a bad one.

Initially imposed as a temporary measure to stimulate road-building in 1974, the provisional tax revenues have continued to be captured ever since by the bureaucrats of what is now Mr Fuyushiba's Land Infrastructure and Transport Ministry - and funnelled out to the road-building industry.

This has resulted in the building and rebuilding of thousands of kilometres of unnecessary roads and bridges, as well as corruption and waste of public revenues.

Mr Fukuda has now promised that when his government re-imposes the petrol tax, he will do his utmost to ensure that after March 2009 the revenues are directed into the general budget, not road-building.

However, the powerful roads lobby in his own party is already gearing up for a fierce fight to protect their pork barrel.