1.0 Importance of Local Governments in public services The role of local government (consisting of 47 prefectures and 1,830 municipal governments) in the Japanese economy is vital. Local government has been a major provider of various public services to the community. Local government services relates with Security and fundamental issues, Social assets security & fundamental issues, Education, Welfare & health plus Economy & industry (Appendix-1). Further, local government is one of the largest users of labor. Particularly, Local governments have the major role in supplying and managing services related to public common assets.
2.0 Local Allocation Tax program
In order to ensure that citizens receive a consistent standard of …show more content…
Existence of extreme regional differentials could slow down national economic amalgamation and delay the process of sustainable economic growth. Deterioration in regional differences also contributes to political stability and public welfare. It is known that money flows from lower to higher in a market economy. In public economy income is reallocated to achieve Pareto efficiency. If there is no program such as LATP there is no way to flow income of high earners to low earning people. Because of income reallocation citizens can enjoy public common assets with low …show more content…
For example, governor of the Tokyo metropolitan government refused LAT revenue in order to be independent from the central government. In other words, the fiscal deficit local governments who could get LAT revenue are requested to be made strict intervention by the central government to improve fiscal deficits. Another demerit of the LATP is if a local government wants to get this LAT revenue they are requested to keep large expenditures. Furthermore, some local governments may include unnecessary utilities to increase their basic financial demand ( ex: Natural stream near the IUJ has included in UPW of Minami Uonuma local government as a canal maintain by the local government) Furthermore, LATP cause to Moral hazard. As the central government gives the LAT revenue to fill the gap between BFD and BFR some local government may reluctant to work efficiently to collect tax income in their areas. This may be a reason that many local governments have budget deficits while very few local governments who have budget surplus. (In 2012 only Seiro, Kariwa and Echigo Yuzawa town governments had fiscal surplus in Niigata
2.0 Local Allocation Tax program
In order to ensure that citizens receive a consistent standard of …show more content…
Existence of extreme regional differentials could slow down national economic amalgamation and delay the process of sustainable economic growth. Deterioration in regional differences also contributes to political stability and public welfare. It is known that money flows from lower to higher in a market economy. In public economy income is reallocated to achieve Pareto efficiency. If there is no program such as LATP there is no way to flow income of high earners to low earning people. Because of income reallocation citizens can enjoy public common assets with low …show more content…
For example, governor of the Tokyo metropolitan government refused LAT revenue in order to be independent from the central government. In other words, the fiscal deficit local governments who could get LAT revenue are requested to be made strict intervention by the central government to improve fiscal deficits. Another demerit of the LATP is if a local government wants to get this LAT revenue they are requested to keep large expenditures. Furthermore, some local governments may include unnecessary utilities to increase their basic financial demand ( ex: Natural stream near the IUJ has included in UPW of Minami Uonuma local government as a canal maintain by the local government) Furthermore, LATP cause to Moral hazard. As the central government gives the LAT revenue to fill the gap between BFD and BFR some local government may reluctant to work efficiently to collect tax income in their areas. This may be a reason that many local governments have budget deficits while very few local governments who have budget surplus. (In 2012 only Seiro, Kariwa and Echigo Yuzawa town governments had fiscal surplus in Niigata