The Liberal Democratic Party¡¯s recent tax agreement with the Democratic Party for the People ensures budget talks will be smooth next year ¡ª but it also raises questions about how Prime Minister Sanae Takaichi will balance ties with her party¡¯s coalition partner, the Japan Innovation Party.
The LDP-DPP agreement on the income tax threshold and budget cooperation earlier this month secures more than enough votes to pass the 2026 fiscal year budget by March 31, once again fueling speculation about whether the next step might be a DPP member entering the Takaichi Cabinet or the formation of a three-way coalition.
Takaichi refrained from commenting on that possibility in a recent Yomiuri Shimbun interview, and the DPP has been noncommittal, with leader Yuichiro Tamaki saying the party will continue to work with the ruling coalition on a case-by-case basis.
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