Factbox: Japan ruling party may need coalition partners

(Reuters) - Japan holds an upper house election on Sunday, the outcome of which could determine how smoothly the ruling Democrats can forge ahead with plans to raise the sales tax and cut huge public debt.

The Democratic Party, which swept to power last year, has a large majority in parliament's more powerful lower house and will almost certainly run the government whoever wins the upper house poll. But the party needs a majority to enact laws smoothly.

If the Democrats fall short of an outright majority they are likely to keep their coalition with the tiny People's New Party (PNP) but they may also woo other parties. While several have said they do not plan to switch sides after the vote, analysts say the dynamics will change depending on the outcome.

Below are possible coalition partners and their policies, with their names in Japanese in parentheses:

PEOPLE'S NEW PARTY (KOKUMIN SHINTO)

Headed by outspoken former banking minister Shizuka Kamei, the party wants stimulus spending of 100 trillion yen ($1.1 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)

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

It wants to cut wasteful spending and tap government reserves.

The party wants the Bank of Japan (BOJ) to do more to overcome deflation. It has suggested the BOJ share a price stability target with the government and that the BOJ support funding for small and medium-sized companies.

NEW KOMEITO PARTY

Founded by members of a Buddhist sect, Soka Gakkai, Japan's third-largest political party favours a 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 while it was in power, wants the government and the BOJ 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 favours 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 and 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 Sanjeev Miglani)