2004 Fiscal Year Final Research Report Summary
Theoretical and Empirical Research on Function and Reform of Local Alocation Tax System
| Project/Area Number |
15530223
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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 | Nagoya City University |
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Principal Investigator |
TORU Mori Nagoya City University, Graduate School of Economics, Professor, 大学院・経済学研究科, 教授 (60134160)
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| Co-Investigator(Kenkyū-buntansha) |
INAGAKI Hideo Yokkaichi University, Department of Economics, Professor, 経済学部, 教授 (70159937)
KAMATA Shigenori Meijo University, Department of Urban Science, Professor, 都市情報学部, 教授 (70214509)
AKAGI Hirobumi Meijo University, Department of Urban Science, Associate Professor, 都市情報学部, 助教授 (30254270)
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| Project Period (FY) |
2003 – 2004
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| Keywords | Local Allocation Tax System / Horizontal inter-regional fiscal adjustment system / Reduction of deference in fiscal ability among local governments / Incentive / Experimental Economics |
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| Research Abstract |
In this research project, first we have established a theoretical model to show how the general revenue of a local government is determined under a system for inter-regional fiscal adjustment. Based on this model, we have deduced some indices to descrbe the performance of an inter-regional fiscal adjustment system in general form. The index for measuring the performance in reducing difference in fiscal abiiy among local governments is expressed by the ratio of the coefficient of variance in per capita general revenue to the coefficient of variance in per capita revenue from local tax. The index for measuring the performance in inspiring local governments incentive to obtain more tax revenue is expressed by the marginal effect of an increase in the tax revenue on the increase in the general revenue. We applied these indices both to the present Local Alocation Tax System and to the "Local Fiscal Adjustment Fund System", in which each local government contributes a certain proportion of i
… More
ts tax revenue to the Fund and the central govenment also contributes a eertan proportion of the sum of the contribution from local governments, and the Fund delivers subsidy to each local government which is equal among local governments in per capita base. With this practice, we have found that the Fund System can reveal better performance than the present system both in reducing difference in fiscal ability among local governments and in inspiring local governments incentive to obtain more tax revenue as long as the ratio of contribution to tax revenue in the Fund System is higher than or equal to the ratio of retained revenue to whole tax revenue in the present system. This theoretical conclusion was verified by laboratory experiments.
After we have done the practice stated above, we have made survey over various literature on the problems and reform of the present Local Allocation Tax System. Through this survey we have come to the recognition that most of the problem of the present system come from its administration initiated by the central government so its reform should be in direction to convert it to a horizontal fiscal adjustment system among local governments initiated by themselves.
Then, in the latter half of our research period, we have inspected the possibility that the "Local Fiscal Adjustment Fund System", which is a horizontal fiscal adjustment system with lump-sum subsidy from the central government, can be administered by local governments through their communication by laboratory experinents. The results of our experiments have shown that in the crcumstance where local governments ca make communication about the. contributions among them, each local government makes contribution to the Fund more than 80% of its tax revenue even if the central government makes no contribution. This result implies that the Fund System can be administered independently by local governments through communication among them and together with our analysis in the forepart of our research period, The Fund System can make better performance in reducing difference in fiscal abiily among local governments than the present Local Alocation Tax System. Less
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Research Products
(4 results)
