Japan tax panel chief resigns over scandal

TOKYO, Dec 21: Japanese Prime Minister Shinzo Abe's point man on tax reform today resigned after reports he was living with a lover in an upscale government-subsidised apartment.

The scandal over Tax Commission Chairman Masaaki Homma was a fresh embarrassment to Abe, who took office in September urging a return to traditional values. Abe has since seen his popularity dented by doubts over his commitment to economic reform.

''Prime Minister Abe had hoped to have Mr Homma lead the discussion (on tax reform) based on his excellent academic qualifications,'' Chief Cabinet Secretary Yasuhisa Shiozaki told a news conference.

''But this morning, Mr Homma phoned Prime Minister Abe and requested to be allowed to resign for personal reasons, so the prime minister accepted his resignation,'' Shiozaki said, adding there would be no change in the government's stance on tax reform.

Analysts said the swift resolution to the matter meant damage to Abe's popularity was likely to be limited.

''It comes during a fall in Abe's support rates, but that's why they decided to get him to resign quickly,'' said Hidenori Suezawa, a government bond strategist at Daiwa SMBC.

Economists expected no change in Abe's pro-growth stance or his stress on spending cuts over an early rise in the 5 percent sales tax as the best way to reduce Japan's huge public debt, a position taken with an upper house election next July in mind.

''The resignation will put an end to the issue,'' said Takeshi Minami, chief economist at the Norinchukin Research Institute.

''The whole thing was a personal matter, and if you look at other members of the tax panel, they were picked to support the idea of revitalising the economy while putting off a rise in taxes.'' A tabloid magazine had reported that Homma was living with a girlfriend in an apartment for civil servants in central Tokyo while his wife remained at home in Osaka, western Japan.

Homma, an Osaka University economics professor, had acknowledged living in the apartment, despite not being a full-time civil servant, and said he was dating the woman while going through a divorce.

He was paying just 77,000 yen (0) a month in rent for the three-bedroom apartment, the Asahi Shimbun said, rather than an estimated 500,000 yen that the apartment would fetch on the open market.

While serving on a different government panel in September, Homma drew up a report calling for the sale of government assets including apartments for civil servants.

REUTERS