Energy

+0.50%

Renewable Fuels, Integrated Oil & Gas, Oil & Gas Transport

Basic Materials

+1.75%

Chemicals Diversified, Aluminum, Construction Materials

Industrials

+1.87%

Industrial Machinery & Equipment, Construction & Engineering

Cyclical Goods & Services

+1.42%

Auto & Truck Manufacturers, Homebuilding, Cons Electronics

Non-Cyclical Goods & Services

+1.00%

Brewers, Personal services, Food Distn & Convenience Stores

Financials

+0.63%

Banks, Diversified Investment Services, Property & Casualty Ins

Healthcare

-0.10%

Pharmaceuticals, Biotechnology & Medical Research

Technology

+0.85%

Semiconductors, Computer Hardware, IT Services & Consulting

Telecoms

+0.94%

Integrated Telecoms, Wireless Telecoms

Utilities

+0.23%

Electric, Gas, Water

Sector Percentage changes powered by Thomson Reuters Indices and Thomson Reuters Business Classification.

(Reuters, July 25, 2010, 11:50 JST)

July 21 (Reuters) – Japan’s ruling Democratic Party should not shy away from debate on raising sales tax in the country despite a major setback in this month’s upper house election, a senior party executive said on Wednesday.

The DPJ and its tiny partner lost their majority in parliament’s upper house after Prime Minister Naoto Kan floated a possible doubling of the 5 percent sales tax to curb the country’s massive public debt, and failed to persuade the public that he had a well-crafted plan for curing Japan’s economic woes.

The Democrats are still in power because they have a majority in the more powerful lower house, but they need allies to help pass bills in the upper chamber and press on with plans to rein in debt and generate economic growth.

“It’s not good for Japanese democracy if the ruling party shuns sales tax debate because that leads to an election defeat,” Goshi Hosono, the DPJ’s deputy secretary-general, said at a media luncheon on Wednesday.

“There may be other things for us to do before starting the tax debate, such as reducing the number of lawmakers and reforming the civil servant system,” he added.

“But we should not shun discussion on the sales tax.”

Japan’s overall public debt is the equivalent of twice the $5 trillion economy — by far the biggest in the developed world.

While many voters were put off by the abrupt way Kan broached the touchy topic, about 60 percent support his proposal to begin cross-party debate on tax reform, according to a poll by NHK public TV released on Tuesday.

Hosono also said the DPJ was willing to work with opposition parties to avoid policy paralysis. “Japan faces a lot of pressing issues in and outside the country. We cannot afford to allow national politics to come to a standstill,” he said.

“We would like to talk to opposition parties on each bill, so that we can work together on it, including a possible revision.”

Hosono dodged a question about whether party powerbroker Ichiro Ozawa, who many speculate will launch a leadership challenge to Kan in a September party election, would stage a comeback, but said cooperation among party members was vital.

The DPJ sidelined the former secretary general, viewed by many voters as an old-fashioned wheeler dealer, ahead of the election, but some political analysts say his politicking talents may be what the party needs to win new allies.

“He is a man who has been playing a very important role in Japanese politics and personally I learned a lot from him,” Hosono said. “What we have to do is to seek ways for all of us to join up.” (Reporting by Kiyoshi Takenaka; Editing by Linda Sieg)

(Reuters, TOKYO | Wed Jul 21, 2010 3:40am EDT)