Establishment of the Hometown Tax Research Committee

June 05 (Tuesday) 2007

In the last column I wrote about the concept of the “hometown tax”. On June 1, a research committee was launched to give concrete shape to this concept. Per the request of the Minister of Public Management, Home Affairs, Posts and Telecommunications, I have assumed the position of chairperson of this committee. I would like to share some thoughts on the first committee meeting.

The research committee is comprised of the following members:

• Haruo Shimada (Chair), Chiba University of Commerce, President
• Naosumu Atoda, Keio University Faculty of Business and Commerce, Professor
• Tokumi Odagiri, Meiji University School of Agriculture, Professor
• Izumi Kuwano, Tamanoyu, CEO
• Hideaki Satou, Kobe University Graduate School of Law, Faculty of Law, Professor
• Mitsuyuki Chiba, Ichikawa City, Mayor
• Issei Nishikawa, Fukui Prefecture, Governor
• Yukihiro Hasegawa, Tokyo Shimbun, Chunichi Shimbun, Columnist
• Takemichi Hatakeyama, Sophia University Graduate School of Global Environmental Studies, Professor
• Tadatsune Mizuno, Hitotsubashi University Faculty and Graduate School of Law, Professor

At the beginning of the meeting, Minister Kan commented that many Japanese citizens wish to contribute to what they consider to be their hometowns in the form of tax payments, and he expressed his desire to create a new system that would meet these expectations. Love of one’s hometown and the natural desire to contribute to it are common feelings among many people, and these are feelings that should be valued. The issue is creating a tax system that will be widely accepted as one that is easy to understand and use.

As I mentioned in the previous column, the relationship between benefit and contribution (payment) is fundamental to taxation, and the current regional tax system is characterized by this contribution–benefit relationship. From the perspective of this traditional theory, the concept of the hometown tax has an element of unfamiliarity.

Each of the committee members shared their opinions on the creation of the hometown tax at the first meeting, and from the earnestness and richness of the variety of points that were raised it became clear that this issue is one that has very broad implications. One shared opinion was that pursuing the hometown system by reevaluating tax systems from the taxpayer’s point of view is an exercise of great significance and value. At the same time, a variety of arguments were raised such as the contribution system is more familiar to the general public, or that the hometown tax system might not do much quantitatively to decrease the disparity in regional tax revenue sources, or that the tax allocation system is necessary to decrease this disparity, and so on.

We as a committee will engage to the extent possible in wide-ranging discussion without preconceived notions, and search for the most appropriate answer that will meet the people’s expectations. To reach such a conclusion in time for next year’s tax system amendments, it is necessary that we reach a degree of consensus on the direction of the committee by this autumn. We must also continue to gradually increase the level of discussion. I will report on any significant future developments in this column.