With Friday's start of the ordinary Diet session, a fierce battle is expected to ensue between the ruling and opposition forces over the fiscal 2008 budget and related bills. As far as the budget is concerned, under the Constitution the Lower House's decision takes precedence over the Upper House's decision. But this provision does not apply to budget-related bills. If the Upper House rejects such bills, the Lower House must pass them again by a majority of two-thirds or more of those present.
A big issue will be how to handle "temporary" additional rates on such road-related taxes as gasoline, automobile weight, automobile acquisition and diesel oil delivery taxes. The "temporary" rates, added to the normal rates, have been in force for more than 30 years. Revenues from these taxes are mainly used for road construction, reduction of expressway tolls and zero-interest loans to local governments. The Democratic Party of Japan, the top opposition party, proposes turning revenues from road-related taxes into a general revenue source to prevent pork-barrel practices and increase budget transparency. It also proposes abolishing the "temporary" additional rates.
The abolition means a loss of ¥1.7 trillion for the central government and ¥900 billion for local governments. This would stall roadworks in the countryside. But the abolition will be a boon to drivers and truckers. It would reduce the prices of gasoline by about ¥25 per liter and that of diesel oil by about ¥17 per liter. If the opposition-controlled Upper House votes down the budget-related bills, the oil price drops can go into effect from April. The Lower House will be forced to pass the bills for a second time. Then the price will come back to the former levels, causing confusion to people and industries.