Japan's Finance Ministry laid low by onrush of scandals

TOKYO — A top finance bureaucrat in Japan left his post on Tuesday, putting another dent in the scandal-laden Finance Ministry as it prepares for key policy initiatives, including raising the consumption tax next year.

Junichi Fukuda last week offered to resign as administrative vice minister over allegations that he sexually harassed female reporters. “It is extremely important that we enact measures that prevent this from happening again,” Chief Cabinet Secretary Yoshihide Suga said Tuesday.

“We hope that national public servants pay close attention to their words and actions,” Toshihiro Nikai, secretary-general of the ruling Liberal Democratic Party, also said.

Fukuda is not the only high-ranking finance official to exit recently. Nobuhisa Sagawa quit as the head of the ministry-affiliated National Tax Agency in March for allegedly lying to parliament about a deeply controversial sale of government land to Moritomo Gakuen, a school operator with personal ties to Prime Minister Shinzo Abe.

These departures have dealt a heavy blow to the Finance Ministry at a time when it faces a full agenda. The ministry is supposed to come up with a plan to improve Japan’s fiscal health, including specific measures to curb social welfare spending, as early as June. It also needs to pave the way for a planned hike in the consumption tax to 10% in October 2019. The government just set up on April 13 a committee tasked with mitigating the impact of the higher tax on spending patterns.

Abe has postponed the hike twice before. Many government and LDP officials say there will not be a third delay, especially given the strong state of the Japanese economy. But the scandals at the Finance Ministry are expected to be a major setback.

“Fukuda’s sexual harassment allegations weakened approval for the Abe government,” a ministry official said. “This makes it harder for the Finance Ministry to make recommendations on improving Japan’s fiscal health to the prime minister’s office.”

Japanese Finance Minister Taro Aso speaks to reporters on April 24 regarding the resignation of Vice Minister Junichi Fukuda. Aso himself is now facing calls to step down. (Photo by Uichiro Kasai)

Abe will make a final decision on the tax increase by the end of this year. “Under normal circumstances, we would want to go across Japan to explain the hike, but we can’t do that right now while we are dealing with the scandals,” another ministry official said.

Parliament’s schedule is already in disarray, with opposition parties refusing to take part in deliberations unless Finance Minister Taro Aso steps down. But some members of the ruling party do not see that as necessary.

“Resigning is one way to take responsibility, and uncovering what happened is another,” Wataru Takeshita, who chairs the LDP General Council, said Tuesday. “A large part of this is up to the politicians themselves.”

“At this point, I am not thinking about my course of action,” Aso told reporters the same day. But the backlash against Aso, who doubles as deputy prime minister, could set back the rest of the government as well.

The last time a vice finance minister stepped down was two decades ago, when public opinion reached a boiling point over the ministry’s excessive wine-and-dine culture. The incident led to the establishment of the separate Financial Services Agency, a watchdog for the securities, banking and insurance sectors.

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