Following its loss of a parliamentary majority in the October general election, Japan's ruling Liberal Democratic Party (LDP) has finally taken steps to revise the Political Funds Control Act once more.

The revisions under consideration include mandating the disclosure of how the allowance for research, public relations and lodging is used; requiring leftover funds to be returned to the national treasury; abolishing policy activity funds distributed by political parties to their members; and establishing a third-party body to monitor political funds.

The amendment to the political funds act passed during the recent regular Diet session was riddled with loopholes. Public criticism of the slush fund scandal that ensnared many of the LDP's factions has not abated, contributing to the party's dismal showing in the election.

Policy activity funds remain a black box, as there is no obligation to disclose how they are used. Prime Minister Shigeru Ishiba, likely out of consideration for opposing views within the party, remains ambiguous, stating that discussions should include the possibility of abolishing them. However, this cannot be delayed further.

A system must be swiftly designed to ensure a third-party oversight body launches with strong enforcement powers.

At the heart of the re-revision lies the issue of banning corporate and organizational political donations. Opposition parties, such as the Constitutional Democratic Party of Japan, have called for a ban, but the LDP continues to oppose this.

During the "Heisei political reforms" of the 1990s, it was decided that corporate and organizational donations would be banned in exchange for the introduction of public party subsidies funded by taxpayers.

In 1994, donations from corporations and organizations to individual politicians were banned. It was planned that donations to political parties would also be considered within five years, but this was ultimately shelved. The double-dipping of public subsidies and corporate donations continues to this day. In 2022, the LDP's political funding group, The People's Political Association, received approximately 2.45 billion yen (approx. $15.8 million) in corporate and organizational donations.

The prime minister has argued, referencing a 1970 Supreme Court ruling that upheld corporations' right to political activity, that corporate and organizational donations are not prohibited. However, the same ruling also highlighted the harm caused by money in politics linked to large-scale donations, stating that these issues should be addressed through legislative measures.

Corporate and organizational donations risk reflecting the interests of well-funded industries, distorting policymaking. While the prime minister has expressed an intention to consider measures like imposing donation caps, such donations should be entirely banned.

For democracy to function properly, ensuring transparency and fairness in political funding is essential. Both the ruling and opposition parties must cooperate to enact sweeping reforms and regain the trust of the people.