The Advent of a Financial Adjustment System for a Sustainable Global Society: Creating New Public Wealth through Reform of Local Government Tax Allocation Schemes

• Published in: Journal of Public Policy Studies Vol. 7; pp. 104 - 116
• Main Author: HITOMI, Yasuo
• Format: Journal Article
• Language: Japanese
• Published: Public Policy Studies Association Japan 25.01.2008
• Subjects: Decentralized society; Financial adjustment system; Local allocation tax; Local governance; Sustainability
• DOI: 10.32202/publicpolicystudies.7.0_104
• ISSN: 2186-5868

Sustainability of global society is substantial subject for local and national governments alike, especially in the area of finances. In the aftermath of WWII, the Japanese government embraced. the motto of a “well-balanced land development” as its national objective. During this period, the government utilized the local government tax allocation system and the “comprehensive National Development Plan” to effectively distribute the fruits of rapid economic growth throughout the country, eventually achieving a national minimum in terms of wealth distribution. Not withstanding, beginning in the 1990s this system was no longer able to achieve the national objectives under the rubric of the expansion-growth paradigm. In light of this infeasibility, a new national objective was promulgated revolving around “the construction of a decentralized society”. Subsequently, what has become clear is that the current financial taxation scheme of national and local governments has still not developed beyond the post-war national governance system.A decentralized society is one in which the local community is managed by its respective local government. To precipitate this type of society, it is essential that reform takes place in the financial tax structure as a basis for governance. Despite a plethora of arguments vis-a-vis local government tax allocation reform being put forth in an effort to expedite decentralization, concrete agreements have not yet materialized between the national government and local governments.It has become evident that reform is necessary in the finance tax structure. Reform will enable local governments to contribute to the sustainability of their community, increase their independence as well as reform epitomizing the greater objective of public policy for global citizens. With this in mind, this paper argues that local governments can emphasize sustainability in their administration through reform of the local government tax allocation scheme in which the “Environmental Load Coefficient” is set as the standard for revenue adjustment and thus allowing for the establishment of a horizontal financial adjustment system.