Japan’s Sanae Takaichi faces early test as coalition talks stall

TOKYO – Japan’s new ruling party leader Sanae Takaichi has yet to reach an agreement with the party’s long-time coalition partner Komeito about continuing their alliance, a delay that highlights the challenges she faces in building a stable administration.

Even with Komeito on board, the Liberal Democratic Party (LDP) lacks a majority in both Houses of Parliament.

That makes it imperative for Ms Takaichi to get the longstanding ally to continue its support before she cuts deals with other parties to obtain the numbers needed to pass budgets and push ahead with policy.

While the most likely outcome is that the two parties will reach agreement in the coming days, the delay shows the level of reservations Komeito has over Ms Takaichi’s right-wing views and her response to funding scandals within the LDP. 

In a sign of that unease, Komeito head Tetsuo Saito indicated in comments that aired on Oct 8 that the party will not vote for Ms Takaichi in a parliamentary ballot to decide the prime minister if a coalition agreement is not in place.

A shock exit by Komeito from the coalition might force Ms Takaichi to make more expensive concessions to opposition parties such as the Democratic Party for the People (DPP) or the Japan Innovation Party (Ishin) to win their backing on a policy-by-policy basis or in a new coalition.

Discussions between Ms Takaichi and Mr Saito on Oct 7 ended without a deal, in contrast to the previous two administrations, both of which signed agreements on the day new LDP party executives were formally appointed. 

Without Komeito, Ms Takaichi faces a shortfall of 37 seats to reach an LDP majority in the Lower House.

In the Upper House, the LDP is 25 seats short.

Komeito was founded in 1964 with the backing of the Buddhist group Soka Gakkai, an organisation whose members can provide a pool of votes.

Collaboration with Komeito since the late 1990s has enabled the LDP to project more of a reassuring image of consensus-building. 

Komeito has typically reined in the LDP’s more hawkish leaders and efforts to remove restrictions on Japan’s Self-Defence Forces, while putting forward policies favouring the vulnerable.

Komeito ensured the sales tax was only raised to 8 per cent on food in 2019 instead of 10 per cent.

Ms Takaichi’s past hawkish comments stand at odds with Komeito’s pacifist stance.

Over the years, Ms Takaichi has been a regular visitor to Yasukuni, which honours Japan’s war dead, including war criminals.

Visits by previous premiers have proven to be a flashpoint for China and South Korea.

Still, Mr Saito said on Oct 7 that he had reached a shared understanding on many points after Ms Takaichi gave a detailed explanation of her views on history, Yasukuni and foreigners.

That likely leaves problems over the LDP’s slush fund scandal as the sticking point, with Komeito pushing for more restrictions on corporate donations.

Ms Takaichi likely inflamed tensions over the funding issue when she appointed Mr Koichi Hagiuda to a senior LDP post on Oct 7.

Mr Hagiuda was one of the lawmakers implicated in the funding scandal.

Whether Komeito stays put or not, Ms Takaichi will need opposition support to pass draft legislation.

She is likely only seeking cooperation from Ishin and the DPP at this stage, given the complexity of expanding or changing the ruling coalition.

She has little time to play with, given a hectic diplomatic schedule if she becomes premier, including a possible meeting with US President Donald Trump later in October.

Ishin holds 35 and 19 seats in the Lower and Upper Chambers respectively, while the DPP holds 27 and 25.

A one-on-one partnership with either Ishin or the DPP, but without Komeito, would not be enough for the LDP to secure control of both Chambers – highlighting the importance of Komeito’s seats.

The LDP signed an agreement in 2024 with the DPP to raise the income threshold in exchange for support on an extra budget, a move that is a basis for further cooperation.

That deal is already set to trim tax revenue by 1.2 trillion yen (S$10.2 billion), according to the LDP.

The Finance Ministry has estimated the lost revenue from lifting the ceiling by the full amount demanded by the DPP at up to eight trillion yen.

Ms Takaichi has said she favours raising the tax threshold.

Still, DPP leader Yuichiro Tamaki talked down the possibility of a coalition after meeting Ms Takaichi on Oct 8, reiterating his view that he wanted to enact policies rather than get a Cabinet position.

The DPP also calls for a blanket sales tax cut to 5 per cent.

The DPP says it can finance the resulting 10 trillion yen shortfall through bond issuance, the surplus from special accounts and unused government funds. Giving in to these demands would make the DPP an expensive partner. 

Based in the western region of Kansai, the right-leaning Ishin has faced off in recent elections against Komeito, which is also based in the area, making them fierce rivals.

That makes Komeito reluctant to see Ishin join the ruling coalition. 

Still, on policy, the parties are not so far apart.

Ishin backed the annual budget for the current fiscal year after securing commitments from the LDP on free high school education and reduced social insurance premiums. 

Ishin supports a targeted sales tax cut that lowers the rate on food to 0 per cent for two years, with the cost theoretically covered by tax revenue surpluses – a less expensive alternative compared with the DPP’s plan.

Ms Takaichi has also endorsed Ishin’s “second capital” initiative, which aims to offer up a city, likely Osaka, as an alternative to Tokyo in case of natural disasters. That may help talks to proceed.

As for Komeito, there are risks if it bolts from the coalition.

Komeito would need to fight for relevance against the more aggressive DPP or the far-right Sanseito, political forces that are more attuned to a younger generation.

Recent opinion polls show Komeito trailing its new rivals. BLOOMBERG