Japan PM makes pitch as party struggles before poll

Japanese Prime Minister Naoto Kan urged voters to give his party a second chance in a weekend election that could deliver a sharp setback to his government, putting his job at risk and stalling efforts at fiscal reform.

Sagging support for the Democratic Party of Japan (DPJ), which surged to power for the first time just last year, jumped after Kan - a former civic activist and Japan's fifth leader in three years - replaced his indecisive predecessor last month.

But ratings slipped after Kan floated the long taboo topic of raising the sales tax to curb a public debt close to twice the size of the nearly £3.3tn economy, and struggled to persuade voters he had a clear plan for fixing Japan's economic woes.

Since then, Kan has stressed that no tax hike would occur before seeking a mandate in the next lower house poll, which must be held by late 2013, but argued that Japan could not put off painful choices if it wants to avoid a Greek-style debt crisis.

"Japan's economy is 20 to 30 times bigger than that of Greece and its public debt is huge, so no country in the world could rescue Japan," Kan told a crowd of voters sweltering on Saturday under the hot sun in a popular shopping area of western Tokyo.

"Japan itself must make sure it avoids collapse," he said, adding ordinary folk would suffer most if finances crumbled.

The DPJ, which ousted its long-dominant rival last year with pledges to cut waste, end bureaucrats' control over policymaking and spend more on consumers to boost growth, will almost certainly run the government whatever the outcome of Sunday's vote because it controls the powerful lower house.

But the party needs a majority in the upper chamber to avoid policy deadlock and begin taking steps to reduce a public debt that is the worst among advanced countries.

Media surveys this week showed the DPJ would likely win around 50 or even fewer of the 121 seats up for grabs in the 242-member chamber - well short of Kan's target of keeping all 54 seats the Democrats have up for re-election.

That would deprive the DPJ and its tiny coalition partner, the pro-spending People's New Party, of a majority in the upper house. The Democrats would be forced to seek new allies, complicating the government's ability to forge ahead with the fiscal reform that Kan has put at the heart of his campaign.

It would also leave Kan vulnerable to a challenge from party powerbroker Ichiro Ozawa - a critic of his sales tax proposal - ahead of a September party leadership vote, although few expect Kan to go without a fight.

Not all voters have been put off by the sales tax talk, and indeed, surveys have shown many think a rise is inevitable.

"I agree with a sales tax rise and I think the sooner, the better," said Akiko Takita, a 63-year-old retired Tokyo resident who voted for the DPJ last year and plans to do so again.

"There should be less discussion and more action."

But many others are having trouble finding a party to their taste, with surveys showing a hefty chunk are undecided.

"I've looked at them all but there is no one I like," said event planner Osamu Sato, 32. "I'll just decide on the day."

The DPJ's current coalition partner opposes raising the 5 percent sales tax any time soon, as do some potential allies. Other opposition parties agree a hike is inevitable but would probably be reluctant to help out the rival DPJ, which has not yet mapped out any detailed tax reform proposals.

The 63-year-old Kan has called for non-partisan talks on tax reform and said any rise in the 5 percent sales tax would take at least two to three years to implement.

He is also touting a "Third Way" economic strategy that would use tax revenues to target growth areas such as healthcare and the environment, although many economist are dubious.

The leaders of two potential partners, the pro-reform Your Party and New Komeito, which partnered with the Liberal Democratic Party until its ouster last year, have rejected the idea of an alliance with the DPJ.

Analysts say they might change their tune later, but would drive hard bargains if the Democrats fare badly.