By Yoko Kubota
TOKYO (Reuters) - Japan's ruling party is likely to fall short of a majority but could hit Prime Minister Naoto Kan's target in next Sunday's upper house poll, media said, an outcome that would complicate policymaking but help Kan keep his job.
The Mainichi newspaper said on Monday it was up in the air if the Democratic Party of Japan (DPJ) and its tiny ally would get the 56 seats needed to control the chamber, meaning the Democrats might need to find new allies to push ahead with steps to rein in Japan's huge public debt, including a possible sales tax hike.
The DPJ, which took power in a general election last year, will almost certainly run the government regardless of the result because it controls the powerful lower house. But it needs a majority in the upper chamber to enact laws and implement policies smoothly.
A July 2-4 survey by the Mainichi showed the DPJ may win between 49 and 59 of the 121 seats up for grabs in the 242-member upper house, and will probably win around 54, short of the 60 it needs for a majority.
Kan has set a target of winning at least 54 seats.
A weak showing would undercut Kan's ability to attract backing from other parties to implement policies and could leave him vulnerable to a challenge from within his own party.
"He (Kan) won't be able to claim victory and that will embolden the small parties as they bargain, or even try to break up the DPJ" if the DPJ falls short of Kan's target of 54 or more seats, said Koichi Nakano, a professor at Tokyo's Sophia University.
"The relative strength morally as they go into (talks on) the post-election coalition framework will be very different depending on the outcome."
TAKING THE BLAME?
The small pro-reform Your Party, whose policies in some ways echo the DPJ's but which has rejected Kan's calls for multiparty talks on tax reform, could win 8 to 13 seats in a jump from one seat it currently holds in the upper house, the Mainichi said.
But nearly 30 percent of voters are undecided, making the result hard to predict.
DPJ powerbroker Ichiro Ozawa, who stepped down as the party's No.2 last month when Kan's predecessor Yukio Hatoyama resigned, has already hinted he might mount a challenge to Kan in a party leadership vote due in September.
"The worst is if they get under 50 seats. Then there will be lots of pressure on Kan to leave. If they get over 50 (but under 54) he'll survive, but weakened and not in a position to get much done," said Columbia University professor Gerry Curtis.
Support for the Democrats rebounded after Kan, a former grassroots activist, took over in June but slipped back after he called for debate on raising the 5 percent sales tax to help curb a public debt already about twice the size of the economy.
In a survey by the Yomiuri newspaper, 65 percent of voters said a sales tax rise was needed, and some market experts believe
an increase is in the works no matter what happens at the polls.
"There may not be a big (Japanese government bond) market reaction even if the ruling coalition does not win a majority ... because the move toward raising the consumption tax is already in motion," said Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Morgan Stanley.
Still, 89 percent of voters in the Yomiuri survey said Kan had not explained the sales tax issue well enough.
"The problem for Kan is that he spearheaded discussion of the tax increase and that, according to the polls, is turning into a negative. If the result for the DPJ is not very good he will have to take the blame personally," Sophia's Nakano said.
Support for Kan's government fell nine points to 39 percent, an Asahi newspaper survey showed, while the Yomiuri put the government's rating at 45 percent, down 5 points.
The Democrats kept their lead in voter preference in the surveys, but the gap with the main opposition LDP narrowed.
(Additional reporting by Linda Sieg; Editing by Michael Watson)