negotiated with politicians, bureaucrats, business and labor unions to introduce a consumption tax, which was introduced at a rate of 3% in 1989. In April 1997 under the government of Ryutaro Hashimoto the rate increased to 5%. The 5% is split between the national and local governments, which receive 4% and 1%, respectively. Shortly after the tax was introduced Japan fell into recession, which was blamed by some on the consumption tax increase, and by others on the 1997 Asian financial crisis. Prime Minister Junichiro Koizumi said he had no intention of raising the tax during his government, but after his massive victory in the 2005 election he lifted a ban on discussing it. Over the following years LDP politicians discussed raising it further, including prime ministers Shinzō Abe, Yasuo Fukuda, and Tarō Asō. The Democratic Party came to power in the August 2009 elections with a promise not to raise the consumption tax for four years. The first DPJ prime minister, Yukio Hatoyama was opposed, but Naoto Kan replaced him and called for the consumption tax to be raised. The following prime minister, Yoshihiko Noda "staked his political life" on raising the tax. Despite an internal battle that saw former DPJ leader and co-founder Ichirō Ozawa and many other DPJ diet members vote against the bill and then leave the party; on June 26, 2012, the lower house of the Japanese diet passed a bill to double the tax to 10%. Despite considerable opposition and an attempted no-confidence motion from minor opposition parties the bill was successfully passed through the upper house on August 10, 2012, with the result that the tax increased to 8% in April 2014 and to 10% in October 2019 (twice postponed from the original date of October 2015). Savings effect Consumption taxes do not tax savings, which allows invested assets to accumulate untaxed. If, in the absence of taxes, one dollar of savings is put aside for retirement at nine percent compound interest, the balance grows to $7.91 after twenty-four years. Alternatively, by assuming a thirty-three percent tax rate, the same dollar is reduced to about sixty-seven cents after taxes when earned. The effective interest rate, thereafter, is reduced to six percent, since the rest of the yield is paid in taxes. After twenty-four years, the balance increases only to $2.73. The cumulative taxes in the latter case are $1.02. The other $4.16 is