- 1815-1973 (online)
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Getting the Most Out of Public Sector Decentralisation in Japan
- Isabelle Joumard, Tadashi Yokoyama
- 27 Jan 2005
- Bibliographic information
Revamping fiscal relations across levels of government is of paramount importance in supporting fiscal consolidation and public sector effectiveness. This paper analyses a number of problems, including regulations that limit local governments’ ability to innovate and respond to local citizens’ preferences, the inefficient system of intergovernmental grants, the complex structure of local taxes and fiscal rules which are too lenient to secure fiscal discipline. The paper concludes that the grant system should be reformed to promote local governments’ incentives to introduce innovations so as to better respond to needs at lower cost. Barriers to the effective use of sub-national governments’ taxing powers should be removed while efforts should be made to keep the tax system as simple and neutral as possible. Existing fiscal rules and market instruments should be hardened. This would require that the central government state clearly that it will not intervene as a lender of last ...
- intergovernmental grants, Japan, local government, fiscal federalism, fiscal discipline
- JEL Classification:
- H1: Public Economics / Structure and Scope of Government
- H2: Public Economics / Taxation, Subsidies, and Revenue
- H7: Public Economics / State and Local Government ; Intergovernmental Relations
- R58: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis / Regional Development Planning and Policy