OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

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 You or your institution have access to this content

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Author(s):
Isabelle Joumard1, Tadashi Yokoyama1
Author Affiliations
  • 1: OECD, France

Publication Date
27 Jan 2005
Bibliographic information
No.:
416
Pages
49
DOI
10.1787/123441886722

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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 ...

Keywords:
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