LEAD: No doubt sales tax hike debate behind DPJ's election loss: Noda.
(EDS: UPDATING WITH MORE INFO)
Finance Minister Yoshihiko Noda said Tuesday that he agrees with Prime Minister Naoto Kan that the debate on a possible sales tax hike can be blamed for the Democratic Party of Japan's setback in Sunday's election.
''No doubt that the debate affected (the election outcome),'' Noda said at the first press conference since the House of Councillors election, in which the DPJ failed to achieve Kan's goal of winning 54 or more of the 121 seats up for grabs.
Yet, he said a drastic tax reform including an increase of the consumption tax ''must be carried out,'' emphasizing the need to promote cross-party discussions as proposed by Kan.
Noda also said the election loss is attributable to the ruling coalition's failure to explain their achievements to voters in the past 10 months since it swept to power last September.
On the DPJ's leadership election scheduled for late September, Noda said, ''It would rather make sense to me that the party support the current leadership'' led by Kan, who was elected DPJ president last month.
On the compilation of a state budget for fiscal 2011, Noda quoted Kan as telling him to form a budget request guideline in coordination with Chief Cabinet Secretary Yoshito Sengoku and the DPJ's policy chief, Koichiro Gemba, when they met earlier in the day.
The government plans to have the DPJ more involved in budget compilation this year as the policy research council was restored in line with the launch of the Kan administration.
Noda reiterated the government's policy of capping general-account spending below about 71 trillion yen for the new fiscal year from April 2011, the level planned for fiscal 2010.
The government is looking to reduce budget requests by ministries and agencies by up to 10 percent from the levels planned in an initial budget for fiscal 2010, to secure allocations for social welfare services whose costs are expected to rise by about 1.3 trillion yen in the next year as the population is aging.
Noda also added that the budget allocation requests should be submitted by the end of August as usual.