Japan - Politics, government, and taxation

Defeated in World War II, Japan began its postwar political life as an occupied country. The Allied military occupation, which aimed to democratize the nation, continued until 1952 when Japan regained its full sovereignty. Japan began political, economic, and social reforms in the second half of the 1940s, which paved the way for its future economic growth. In 1947, its new constitution provided for a democratic multi-party political system based on a free-enterprise economy. The emperor remains as a ceremonial head of state, but political power rests with the prime minister as head of government. The parliament consists of a 480-seat House of Representatives (Shugi-in) and a 252-seat House of Councilors (Sangi-in). Members of parliament are elected through regular free and fair parliamentary elections held every 4 years. In practice, the leader of a party, or coalition of parties, with the majority of seats in the House of Rep- resentatives becomes the prime minister. The central government in Tokyo makes all major policies and decisions, which are implemented by the regional and municipal governments.

The Liberal Democratic Party (LDP) has dominated the Japanese political system for most of the postwar era, either as the ruling party or as the leading member of a coalition government. In the June 2000 parliamentary elections, the ruling coalition of the LDP, the New Komeito, and the Conservative Party maintained its parliamentary majority and remained in power. These 3 parties favor a free-enterprise economy with a strong private sector in which the state also plays a role.

The Japanese government has a great influence in the economy. It is extensively involved in the development and operation of the nation's infrastructure (roads, airports, power generation, and telecommunications services). The government's regulatory power enables it to exert control over economic sectors and activities. It uses its resources and power to develop domestic industries through direct financial assistance to emerging or ailing industries and by setting various regulations to protect industries from foreign competition. The worsening of the economic situation in 1991 resulted in a demand by business for the deregulation of the Japanese economy to enable it to cope with the economic downturn. Deregulation reforms have resulted in a smaller state role in the economy, although it still exercises great influence.

With the exception of the Japan Communist Party, the opposition political parties of Japan support a free-enterprise economy led by a strong private sector with a varying degree of state involvement. Among them, the most important ones are the Democratic Party of Japan, the Liberal Party, the Reform Club, and the Social Democratic Party.