Japan parliament clash heats up over gasoline tax

By George Nishiyama

TOKYO, Jan 30 (Reuters) - Japan's ruling bloc looked set to ram through parliament on Wednesday a stopgap bill to extend a provisional gasoline tax, intensifying a feud with the opposition that could stall the budget and might even trigger a snap election.

Outraged at the step, the opposition was pondering whether to boycott parliament or even try to block business physically, moves that could delay enactment of the national budget for the year starting April 1 and stall approval of a successor to Bank of Japan Governor Toshihiko Fukui, whose term expires on March 19.

The main opposition Democratic Party of Japan, which along with smaller allies controls the upper house, wants to abolish the gasoline tax, charging that the levy, which is devoted to building roads, has been used for wasteful spending and to serve vested interests.

"We agreed that this (stopgap bill) should not be permitted and that we must prevent it," DPJ leader Ichiro Ozawa told party lawmakers, adding that abolishing the tax would amount to a welcome tax break at a time of worries about the economy.

Gasoline prices would be cut by around 25 yen (23 cents) a litre if the tax is not extended beyond a March 31 expiry.

Prime Minister Yasuo Fukuda's ruling coalition is seeking to extend the tax measure for 10 years, but it submitted the stopgap bill to extend it for two months for the time being.

The ruling camp plans to approve the bill later on Wednesday in a plenary session of the lower house, where they have an overwhelming majority, to avert the expiry of the tax measure.

If the lower house approves the bill, the upper house can either reject or sit on the legislation for 60 days, after which the ruling bloc can use its two-thirds majority in the lower chamber to force through the law with a second vote.

Taking that rarely used step, however, may not go down well with voters.

"The government and ruling coalition are trying to use their majority to force through a measure that ... ignores Japan's parliamentary democratic system," Ozawa said.

Democratic Party executives have hinted they might submit a non-binding but embarrassing censure motion against Fukuda in the upper house in hopes of forcing him to call a snap election.

But the timing of a poll is uncertain as Fukuda is wary of a snap vote that would almost certainly see his ruling bloc lose seats, and there are doubts whether the Democrats are prepared for an election, even within the party.

No lower house election need be held until September 2009.

Strong-arm tactics by the opposition also risk angering voters worried about a possible impact on the economy at a time of concerns about the impact of the U.S. subprime problem. (Additional reporting by Linda Sieg and Chisa Fujioka; Editing by Hugh Lawson)