While other government officials urged the party to break the deadlock, Democratic Party of Japan President Ichiro Ozawa said there were "huge differences" between the party and the government on how to approach the country's budget, Kyodo reported.
Chief Cabinet Secretary Nobutaka Machimura urged "calm" but said the Diet "is nearly on the verge of collapse."
The Democratic Party of Japan can delay a vote on the bill until April 29 but the House of Representatives, in control of the ruling party, can eventually take over the debate and pass the bill, Kyodo reported.
Japanese Prime Minister Yasuo Fukuda, who pushed for a vote on the bill, said a delay "will affect the lives of the public.''
The government said ending the tax would lead to a $30 billion shortfall in revenues.