Japan Govt, Ruling Bloc Seek to Lessen Tax Revenue Gap among Regions

Tokyo, Dec. 4 (Jiji Press)–Japan’s government and ruling parties have begun discussions on correcting what they say is an imbalance in tax revenues favoring Tokyo, which has led to widening regional disparities in administrative services, it was learned Thursday. They are considering reallocating part of local corporate and fixed-asset taxes from Tokyo to other local governments. The ruling coalition of the Liberal Democratic Party and the Japan Innovation Party, also known as Nippon Ishin no Kai, plans to include this policy in their fiscal 2026 tax system reform outline and continue discussing details of the scheme from the fiscal year starting next April. According to the internal affairs ministry, the financial resources that the Tokyo metropolitan government can use at its own discretion total 281,000 yen per resident, about 3.6 times higher than the average of those for Japan’s remaining 46 prefectures at 78,000 yen per capita. Using its abundant financial resources, the metropolitan government has in recent years offered benefits such as a 5,000 yen monthly allowance for children up to the age of 18 and free basic water charges during summer months. Other local governments have voiced complaints that such differences in financial capacity are widening disparities in administrative services. Last month, the ministry’s Local Public Finance Council proposed that discussions be held on correcting this imbalance, pointing out that the tax revenue disparity was a structural issue caused by the concentration of population and economic activity in Tokyo. Meanwhile, Tokyo Governor Yuriko Koike expressed skepticism over claims of imbalance, telling reporters on Thursday that there is no disparity to be corrected as the metropolitan government does not receive allocations of tax revenue from the central government. On the fact that Tokyo’s child-rearing support measures are better than those of other local governments, Koike said: “It’s up to each local government to decide what to prioritize. We are promoting (child-rearing measures) because the concept of ‘children first’ is important.” END [Copyright The Jiji Press, Ltd.]