2003 Fiscal Year Final Research Report Summary
Fundamental Reform of Local Public Finance in Japan
| Project/Area Number |
14530116
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | SEIJO UNIVERSITY |
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Principal Investigator |
YUI Yuji Seijo University, Faculty of Economics, Professor, 経済学部, 教授 (70115153)
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| Co-Investigator(Kenkyū-buntansha) |
SATO Motohiro Hitotsubashi University, Graduate School of Economics, Associate Professor, 大学院・経済学研究科, 助教授 (50313458)
TAJIKA Eiji Hitotsubashi University, Graduate School of Economics, Professor, 大学院・経済学研究科, 教授・研究科長 (10179723)
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| Project Period (FY) |
2002 – 2003
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| Keywords | Local Public Finance / Local Allocation Tax / National Grants to Local Governments / Linear Transfer System / Triune Reform of Local Public Finance / Long Term Care Insurance / Medical Care for the Aged / Role of Assuror |
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| Research Abstract |
The purpose of this research is to examine the fundamental reform of local public finance. The present system contains such mechanism that discourages local governments against activating their economy and improving their financial-condition, but promotes their dependency on the central government. The fundamental reform of local public finance is needed to reinvigorate Japanese economy.
This study examines the three aspects of this problem. First, we analyze the long-term care insurance system, which was introduced in 2000, and was managed by local governments (cities, towns, and villages) as assurors. Use of services by aged people has been growing more rapidly than estimated, and the financial position of insurance deteriorated drastically in a few years. Through interviews with local officials in charge and private suppliers of long-term care services, we investigate what are real problems of long-term care insurance.
Secondly, we have studied the problem of local taxes, specifically the tax on corporate business income. Local corporate business tax has been a major tax revenue source in prefectures, but its revenue is vulnerable to cyclical changes in economic conditions and is unevenly distributed among prefectures. The government decided to reform its tax base into the pro forma standard tax base. We speculate the problems of government's reform of local business income tax.
Finally, we investigate the central-local government relation. The study is comprised of two analyses. One is a theoretical study of fiscal decentralization, which has paid special attention to Asian countries. Another study deals with fundamental reform of local public finance, namely trinity reform of local public finance. We have proposed to abolish the existing Local Allocation Tax System and Central Government Subsidy System, and to transform them into Linear Transfer System, which will improve greatly local governments' incentives to activate local economy.
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Research Products
(15 results)
