Projection of the Japanese Prime Minister’s Power over Local Governments

• In Event: Further Expansion of the Japanese Prime Minister’s Power

Abstract

This paper shows that the increasing influence of the Prime Minister's Office (Kantei) in Japan has had a significant impact on central-local relations in fiscal terms.

The local allocation tax is a tax that the national government collects on behalf of the local governments and redistributes it according to certain reasonable standards, in order to adjust the imbalance of financial resources among local governments and to guarantee financial resources so that all local governments can maintain a certain level of administrative services. The local tax is collected by the national government on behalf of the local governments and redistributed according to certain reasonable standards.

When allocating the local allocation tax, objective indicators such as population and area have been used as "certain reasonable standards. In recent years, however, the criteria for allocating local allocation taxes reflect the policy direction favored by the prime minister and the Prime Minister's Office.

This is because Prime Minister Abe, Suga, Kishida created a number of new budgets which the government can allocate to local government which the government distribute without respecting the criteria for allocating local allocation taxes. From 2014, the Abe administration began to formulate local revitalization policies and in FY 2016, introduced Local Revitalization Subsidies to promote growth of local economies. In FY 2020, the Suga administration created "Expenditures for Community Revitalization Projects" to assist local governments who face decline in population. Furthermore, the Kishida administration launched "Digital Rural City Initiative from its outset and aims to promote digital transformation of local areas.

Further the Kishida administration has introduced a new criterion to distribute local allocation taxes. Namely, it has made explicit that the government will consider the amount of My Number Card issuances when it calculates the size of financial resources which the central government will transfer to the local governments.

Thus, the prime minister can project more discretion in distributing financial recourses of the central government to local government.

Author

• Hajime Kidera