By TOKO SEKIGUCHI
TOKYO—Japanese political kingpin Ichiro Ozawa unveiled his new party Wednesday, pledging to overturn Prime Minister Yoshihiko Noda's proposal to double the nation's consumption tax and seriously threatening the premier's grip on power.
While public opinion polls show that voters have low expectations for Mr. Ozawa's party, it would be the third-largest in the lower house, and could dislodge the prime minister if it joins hands with other opposition parties.
"The Democratic Party of Japan betrayed the Japanese people," Mr. Ozawa said of his old party that he helped bring into power. "Our first goal is to overturn the tax hike bill."
Japanese political kingpin Ichiro Ozawa, center, and parliament members raise their arms as they shout slogans at their party's first convention in Tokyo on Wednesday.
Mr. Ozawa's new party, Kokumin no Seikatsu ga Daiichi, which translates as "People's Livelihoods First" was the DPJ's campaign slogan. Mr. Ozawa said his party's policies would be a return to the DPJ's old self, but that the specifics are being worked out for announcement next week.
The new party boasts 49 upper- and lower-house members, all of whom left the ruling Democratic Party of Japan last week in protest against the tax hike bill—making it the third-largest national political party.
The 37 lower-house lawmakers voted against the bill in defiance of DPJ leadership before defecting from the party. Mr. Ozawa has vowed to block the bill when it comes to a vote in the upper house next month.
Mr. Ozawa and his followers maintain that Mr. Noda's push to increase the sales tax to 8% in 2014 and 10% in 2015 is a breach of the DPJ's 2009 election promise not to raise the tax for at least four years.
Additionally, they claim the DPJ's shelving of pension and elderly health-care reforms to gain the support of the main opposition parties to pass the tax bill is a betrayal of voters who brought the DPJ to power in 2009 on promises of generous social-security payouts.
Critics say Mr. Ozawa's call for increased public spending, welfare handouts and farm subsidies while rejecting hiking taxes is unrealistic, given that the DPJ leadership admitted last year it had overestimated sources of new funding for programs promised in the election.
National polls have shown that while the public remains split on the tax hike, about 80% expect little from Mr. Ozawa's party.
This is the fourth party Mr. Ozawa has created since breaking with the Liberal Democratic Party in 1993, causing him to be nicknamed "Destroyer" for his record of creating and splitting parties.
But while this latest move may not impress the public, the size of Mr. Ozawa's party creates a headache for the premier, who must deal with grumbling anti-tax lawmakers who remain in the DPJ and who may threaten to join Mr. Ozawa.
With the DPJ's majority having slipped to 250 in the 480-member lower house, Mr. Noda will be on thin ice as he navigates other divisive issues such as the multi-nation Trans Pacific Trade Partnership free trade agreement.
Former premier Yukio Hatoyama, whose party membership was suspended for three months for voting against the tax hike, has been stepping up his criticism of Mr. Noda. Mr. Hatoyama has also formed an anti-tax group within the DPJ, giving rise to speculation about his support for Mr. Ozawa should a no-confidence motion be submitted in the lower house.
In addition to the 37 lower-house members, Mr. Ozawa is expected to form a voting bloc with another opposition party, bringing him closer to the 51 votes needed to submit a no confidence motion. Opposition leaders from smaller parties have suggested cooperating with Mr. Ozawa to oust Mr. Noda.
Write to Toko Sekiguchi at toko.sekiguchi@dowjones.com
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