How do local governments react to the accumulation of debt? Whereas public debt/GDP ratio has reached the worst levels in Japan, this paper provides evidence of corrective action: the marginal response of primary surpluses to changes in debt is increasing in the debt-GDP ratio. This paper also...

The sales tax would seem to be a good candidate for subnational taxes. It is a broad based tax whose base is relatively evenly distributed across regions, and is a revenue raising component of the tax mix, rather than one used for redistributive purpose. The purpose of this paper is to...

The defining characteristic of Japan's system of intergovernmental fiscal relation has been the strong collective preference for equal access to public goods. Equal access to public goods and fair sharing of the burden to finance these goods were viewed as essential for economic and social...

There seems to be broad consensus in the literature that comprehensive VATs are most appropriately assigned to the central level of government. Japan's Local Consumption Tax is unique in the sense that it combines origin-based piggy backing on the national VAT with a clearing system that is...

Japanese local bond system faced major challenge since the World War‡U. This paper shows accurately and widely as much as possible what the issue is, and investigates pros and cons to this from the viewpoint of finance. We argue that the change in last few years was fundamental rather than...

This paper examines the welfare state under a sovereign debt crisis during first ten years in the 21st century. We rely on data to check whether generalizing claim about the unsustainability of the welfare state hold up . The investors' valuation of a country's fiscal position is time varying,...

Intergovernmental fiscal relations in Japan have been strained in recent years. This paper seeks to assess the Japanese equalization transfer in the light of the theory of fiscal federalism. This paper argues that the case for equalization lies in offsetting net fiscal benefit (NFB)...

In many countries, local borrowing is an important source for long-term development projects such as roads, bridges, and waterworks. Local borrowing for such projects is justified on the ground that benefit of these projects often last decades and the cost of these projects should be borne by...

The Local Allocation Tax (LAT) plays important role in fiscal equalization in Japan. The purpose of this paper is twofold: reviewing the key themes and issues of the LAT; and considering package of reforms designed to revitalize Japan's fiscal equalization program and to establish a sustainable...

Local VAT had been introduced in Japan in FY1997. Several problems became evident with the current system. The purpose of this paper is to identify these problems in detail and to suggest reform options in the light of international experience and the fiscal federalism literatures. We argue that...