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Saturday, July 17, 2010

More tax income needed: governors


Staff writer

WAKAYAMA — Prefectural governors warned Friday that the ruling bloc's loss in Sunday's Upper House election means more political gridlock ahead, and unless local leaders work with the coalition and the opposition camp to pass legislation and secure more tax income, regional growth and quality of life will quickly deteriorate.

News photo
Need more tax money: Prefectural governors wrap up their two-day meeting in a news conference in Wakayama on Friday. KYODO PHOTO

"The Upper House election have given birth to a 'twisted Diet.' If this stops policy from getting implemented, people's lives and the future of Japan will be deeply affected," the National Association of Governors said in a statement issued at the end of a two-day annual meeting in Wakayama.

The association specifically warned that the time for factional and party infighting is over.

"Given the new political situation, we seek a process that goes beyond political parties and factions. For this reason, our association strongly urges the creation of a mechanism to include all parties to discuss and help implement policy," the statement said.

The Democratic Party of Japan-led ruling bloc not only lost its Upper House majority, but even with its partner, Kokumin Shinto (People's New Party), the coalition lacks the two-thirds majority needed in the Lower House to swiftly override any Upper House action.

"In the late 1990s, people talked about Japan's 'lost decade' after the bubble economy collapsed. And then it became the lost two decades. We have to make sure we're not talking about Japan's lost three decades in a few years," Fukuoka Gov. Wataru Aso, chairman of the association, told reporters following the meeting.

Aso added the association would like to participate in such a mechanism, but that discussions between the ruling and opposition camps must come first.

Of particular concern to the governors at this year's meeting was how to get a larger share of revenue from the 5 percent consumption tax at a time when discussion raising the levy is especially difficult in the wake of the election. By 2013, the gap between local tax revenues and local expenditures is expected to expand to ¥10.4 trillion.

Many local governments are virtually bankrupt due to a combination of falling tax revenue and debts accumulated because of spending in the 1990s on failed public-works projects.

To address this problem, the association called for the central government to provide more consumption tax revenue to help make up the difference, with the extra funds to be used for social welfare services, especially hospitals, clinics and child care facilities.

Although the meeting concluded with no recommendation of a specific percentage increase, there was some discussion Thursday about a meaningful increase over the current 1 percent the prefectures receive in sales tax revenue.

But the association refused to endorse a proposal by Osaka Gov. Toru Hashimoto, who opposes the idea of simply asking Tokyo for more money. On Thursday, he called for the prefectures to raise their own taxes if they needed extra revenue, but none of the other governors agreed.

"If you're going to ask for money from the central government, you should raise prefectural taxes as well," Hashimoto said, although he did not specify if he favored higher local corporate taxes as well as individual taxes.

Shiga Gov. Yukiko Kada indicated her opposition to the idea, noting it would take a very long time to discuss, time the prefectures don't have. Ehime Gov. Moriyuki Kato was especially critical, saying Hashimoto was the only governor to support raising prefectural taxes.



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