Fukuda says Japan faces budgetary crisis

TOKYO, April 1 (UPI) -- The withdrawal of Japan's gasoline tax under opposition pressure threatens a budgetary crisis, Prime Minister Yasuo Fukuda has warned.

The opposition-led action effective Tuesday would result in a $26 billion revenue loss, or 1 percent of the nation's gross domestic product, and create a "gaping hole," in the $813 billion budget, the Financial Times reported Fukuda as saying.

The prime minister warned such an impact would result in cuts in social welfare programs or force the government to issue deficit-funding bonds.

Fukuda said abolishing the gasoline tax of more than $1 a gallon, which has been in force for 30 years, was wrong as it comes at a time of rising levies across the world to cut carbon emissions, the newspaper reported.

"There is no need to extend the provisional gasoline tax rate," opposition leader Ichiro Ozawa said in rejecting Fukuda's warnings. "Rather, benefits should be returned to the people."

Some economists have said such a cut may inspire consumer sentiment, the newspaper reported.

Japan's opposition party controls the upper house of Parliament while Fukuda's coalition government has a majority in the lower house. Since he assumed office in September, there has been little legislative cooperation between the two sides.