Factbox: Japan ruling party’s possible coalition partners

(BestGrowthStock) – Japanese Prime Minister Naoto Kan’s ruling coalition was set to lose its majority in parliament’s upper house after an election on Sunday, threatening efforts to curb massive public debt and putting his job at risk.

Kan’s ruling Democratic Party of Japan (DPJ) will almost certainly stay in power by virtue of its majority in parliament’s powerful lower house but will need to seek new partners to control the upper chamber and pass bills smoothly.

A new coalition risks complicating policymaking as Japan struggles to engineer growth and rein in public debt nearly twice the size of GDP.

Below are possible coalition partners and their policies (Japanese names in parentheses):

PEOPLE’S NEW PARTY (KOKUMIN SHINTO)

The PNP, the DPJ’s current partner, wants to stay in the ruling coalition. Headed by outspoken former banking minister Shizuka Kamei, the party wants stimulus spending of 100 trillion yen ($1 trillion) over the next three years.

It has said the 5 percent sales tax should not be raised before an economic recovery.

The conservative party began as a group of Liberal Democratic Party lawmakers who opposed former Prime Minister Junichiro Koizumi’s plan to privatize the postal system. The Democrats have promised to pass a shelved bill to scale back postal privatization in the next session of parliament.

YOUR PARTY (MINNA NO TO)

Your Party has ruled out a coalition with the DPJ but has said it could cooperate with the DPJ on policies such as getting the Bank of Japan (BOJ) to do more to overcome deflation.

The party has suggested the BOJ share a price stability target with the government and that the BOJ support funding for small and medium-sized companies.

The party, headed by another former banking minister, Yoshimi Watanabe, who left the then-ruling Liberal Democrats last year, has promised not to raise the sales tax for another three years.

It says the government should first cut wasteful spending and tap government reserves.

NEW KOMEITO PARTY

The party has ruled out a coalition with the DPJ and has said it will not cooperate on policies. Founded by members of a Buddhist sect, Soka Gakkai, Japan’s third-largest political party favors drastic reform of the tax system, including the sales tax, but has not specified by how much the sales tax should be raised.

The party, which was the Liberal Democratic Party’s coalition partner when it was in power, wants the government and the Bank of Japan to cooperate to achieve inflation of 1-2 percent.

NEW RENAISSANCE PARTY (SHINTO KAIKAKU)

Headed by Yoichi Masuzoe, a popular former health minister who left the Liberal Democrats in April, the party says Japan’s finances will be unsustainable without a sales tax increase to over 10 percent by 2020.

The pro-reform party has also called for a 1-2 percent inflation target and favors lowering the corporate tax rate to 25 percent from the current rate of around 40 percent.

SUNRISE PARTY OF JAPAN (TACHIAGARE NIPPON)

Led by former finance minister Kaoru Yosano and ex-trade minister Takeo Hiranuma, the party wants to raise the sales tax to 8 percent from 2012/13 before raising it to 12-15 percent after the economy recovers. The party of former Liberal Democratic Party lawmakers also wants to lower the corporate tax to 30 percent from 2012/13.

SPIRIT OF JAPAN PARTY (NIHON SOUSHINTO)

Founded by heads of local governments, the group has pledged to halve the corporate tax rate to 20 percent and to gradually raise the consumption tax to 10 percent, using the revenues to fund social security costs.

LIBERAL DEMOCRATIC PARTY (JIYUMINSHUTO)

The LDP, ousted by the Democrats last year after more than 50 years of almost continuous rule, is the main opposition party. It has called for the sales tax to be raised to 10 percent.

Like the Democrats, LDP members range from proponents of market-friendly reforms to those who favor a gentler capitalism. Both are also home to diplomatic doves seeking closer ties with Asia to pro-U.S. advocates of a bigger security role for Japan.

(Reporting by Chisa Fujioka and Kiyoshi Takaneka; Editing by Michael Watson)

Factbox: Japan ruling party’s possible coalition partners