Spending without Taxation: FILP and the Politics of Public Finance in Japan

By Gene Park | Go to book overview

EIGHT
The Koizumi Reforms and
the Legacy of FILP, 2001 and After

Despite a decade of reforms targeted at FILP, reform did not fade from the political agenda. To the contrary, Koizumi Junichirō, one of the most popular postwar prime ministers, came into office in 2001 promising to deliver radical reforms not only to restore economic growth but also to take on the vested interests in his own party. Koizumi vowed to “destroy the LDP to save it” and to deliver “reform with no sacred cows.” Koizumi, who had long had an interest in FILP reform, set his sights on postal savings and the FILP system, making both issues central to his larger reform agenda. This chapter explains what Koizumi accomplished and why Koizumi succeeded where others failed; it then concludes with an assessment of the legacy of FILP— what it has left behind and how it has shaped what will come in the future.


Koizumi and Reform

Koizumi was a zealous reformer because reform allowed him to pursue two simultaneous goals. First, Koizumi attempted to use structural reforms to create a leaner, more efficient, and less intrusive state that would promote more vigorous market competition. Second, and arguably even more important, Koizumi exploited reform as a battering ram to transform his political party. Koizumi wanted to break up political factions within the LDP, centralize decision making, reduce the party’s dependence on political pork, and realign its base of support from rural areas and laggard economic sector to urban voters and more dynamic sectors. Koizumi, whose base was

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