Home Town Tax Payments
May 22 (Tuesday) 2007
The concept of “home town tax payments” has been introduced within various government circles and is currently the subject of discussion. The origins of this discussion go back to May 1 when Yoshihide Suga, Minister of Public Management, Home Affairs, Posts and Telecommunications, who is in a position of authority regarding regional tax, held a press conference during an official business trip in Paris and mentioned the possibility of creating a “home town tax payment” system. Prime Minister Abe then spoke on the importance of valuing one’s home town and expressed his desire to think proactively on the issue. Director-General of the Secretariat Shiozaki followed suit with a statement showing his desire to examine the issue further, while Secretary-General of the Liberal Democratic Party Nakagawa emphasized the importance of endeavoring to shrink the disparity in tax revenue sources among regions including the “tax system for donations”. In this way, discussion on the “home town tax payment” system has garnered interest from a variety of different areas.
There is a widespread view among tax experts that this concept, in terms of tax theory, is not compatible with the current system. This is because regional tax systems are fundamentally based on the principle of contribution and benefit, where residents pay in return for administrative services provided by the regional governments. The “home town tax payment”, however, is not a system where direct payments would be made in return for administrative services, and as such it will not be compatible with the principles of regional tax systems. As “home town tax payment” would have ramifications for the very foundation of the tax system, there is a strong sentiment even among Ministry of Finance and LDP officials to proceed carefully.
On the other hand, as population decline continues and regional economic and tax revenue source (tax base) disparities only widen, there are many who agree that it is necessary have the wisdom and action to increase the tax revenue sources for regions that are sparsely-settled and suffering from this decline (in some cases severe). Yahoo immediately conducted a survey on the “home town tax system”, and many responded with positive interest. In terms of the definition of “home town”, “the place where I was raised”, “the place I want to live in the future”, and “the place where my parents live” received the most answers, in that order.
Minister Suga has announced the creation of a research committee of experts that will begin studying how to implement the “home town tax system” in June. It is a fact that this new system is not compatible with traditional theories. However, it is an issue that holds particular significance because it involves the question of whether or not new knowledge that will defy traditional theories and structures can be generated in response to the serious challenges that society will face. Not limited to tax theory, this is an issue that can be found in various fields and bears relevance to the very state of the economy and companies. For example, we are now faced with many challenges that go beyond traditional thought patterns or theories, such as the relationship between welfare and market competition or the relationship between corporate behavior and social ethics.
While the pros and cons of the “home town tax system” are debated, what is needed in the Japanese peninsula, where the distribution of resources is increasingly becoming imbalanced, is flexible knowledge that will lead to a high-level of satisfaction for all people.