Up to three months ago, the Prime Minister who signed the bill into law, Tomiichi Murayama, staked his career on opposing an increase in sales taxes. As the Socialist leader in opposition, he argued that they were unfair to lower income families. Yesterday, all smiles for the cameras, he agreed the increases.
Politically, Japan is out of control. In the past 15 months, it has had four Prime Ministers, and debate has swung wildly from the most conservative to the most progressive camps. Should Japan aspire to a permanent seat on the UN Security Council? Is it necessary to apologise for the war? Is radical political reform necessary? How fast should the economy be deregulated and markets opened to imports? Each of these is central to the future of the country, and yet none has found any clear solution.
Holding up the debate is a fight to the death between two powerful men. In the conservative, 'if it ain't broke, don't fix it' corner is Noboru Takeshita, the 70-year-old former prime minister and veteran of every significant political scandal in the last two decades in Japan. In the aggressive, pro-reform corner is Ichiro Ozawa, the 51- year-old former lieutenant of Mr Takeshita who shook up the political system last June - and forever alienated Mr Takeshita - by splitting the Liberal Democratic Party (LDP) and ending its 38-year run in office. Mr Ozawa argues that Japan must become a 'normal country' by improving its citizens' quality of life, curbing corporate and bureaucratic power, and playing a more responsible international role.
After last year's July elections, Mr Ozawa patched together a coalition dedicated to these aims. But internal squabbling paralysed the government, which finally fell in June. In its place a cynical coalition of the LDP and their former enemies, the Socialists, was inaugurated, headed by Mr Murayama. A faithful Socialist during the Cold War, Mr Murayama was nonetheless quick to adapt to the demands of government: within days of his appointment he gave up his opposition to the existence of the country's armed forces, to the security treaty with the US, to nuclear power plants and to Tokyo's recognition of South rather than North Korea.
Behind Mr Murayama stands Mr Takeshita. He has been accused in the Diet (parliament) of using gangsters to help him win the prime ministership in 1987, of taking money from the scandal- ridden Sagawa delivery company, and of misappropriating funds while finance minister. He was forced to resign as prime minister in 1989 because of his involvement in the Recruit shares-for-favours scandal: his private secretary committed suicide over the affair. His record is so notorious that even the LDP felt they could not keep him on their books, so he ran as an independent in the last elections.
Power is never transparent in Japan: Mr Takeshita is the kingmaker behind the current government. After 36 years in the Diet, his influence is considerable. His links with Mr Murayama go way back, to when the LDP and the Socialists held private meetings to ensure their public disagreements never actually paralysed government.
Mr Takeshita's master plan for the current coalition is to hold off any serious reform or deregulation measures while the LDP rebuilds its strength to return to single- party power. The Socialists are merely a means to that end. 'We have swallowed the Socialists and we have them in our stomach,' a magazine quoted him as saying. 'All that remains is for the gastric juices to digest them.'
Meanwhile Mr Ozawa is working furiously to build a coalition out of the 10 opposition parties in the Diet. But this is proving difficult: the initial plan to have the single new party up and running by this month has been delayed. But in the end Mr Ozawa, as a politician from a younger generation than Mr Takeshita, is in the stronger position. The biggest challenge to the old order is the ordinary Japanese consumer. The old racist arguments from the Agriculture Ministry that Japanese will not eat foreign apples, beef or oranges are now demonstrably untrue. One of the biggest hits during this summer with its record heat wave was a beer from Belgium, selling at nearly half the price of Japanese brews.
This consumer revolt will be magnified by the next elections, when a new voting system will at least partially redress the bias in the old electoral system towards the farming vote. The urban vote will not be so easy to buy, and will have a far more varied and cosmopolitan range of sectoral interests to satisfy than simply maintaining a high price for rice producers.
Mr Takeshita and his colleagues have no answer to these problems, which will not be addressed until Mr Ozawa or someone else from the pro-reform camp gets into the driving seat.