Education, welfare, fire defense, rescue, garbage management, and most of the local services closely related to our daily lives are provided by municipalities and prefectures. Local taxes are a source of funding for such services, borne widely and jointly by the inhabitants of the community and other interested parties, and imposed by prefectures and municipalities according to ordinances.
In September 2009, the functions of the ruling party's conventional Tax Commission and those of the Government of Japan were integrated to establish a new "Tax Commission" consisting of Diet members. The Local Tax Bureau (LTB) revises the taxation system concerning local taxes based on debates held at that Tax Commission in order to establish a taxation system for promoting regional sovereignty reform.
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- ＞Local Tax Bureau(LTB)
As a player in running the system of local taxes
Enhancing local taxes (Fig. A)
The revenues of a local association (planned to account for 82.5 trillion yen of local finance in fiscal 2011) include local taxes, as well as local allocation taxes, amounts financed by government subsidies, local bonds, and other sources. Local taxes amounted to 33.4 trillion yen, accounting for 40.5% of the total. To proceed with reforms in regional sovereignty and for other purposes as well, these local taxes as membership fees for the local community must be enhanced and its percentage to revenues further increased, in order to allow local associations to manage their administration and finances in a voluntary and self-reliant manner.
Given the great gap between the ratio of the state to regions in tax revenues shouldered by the citizens, and the ratio of the state to regions in expenditures (final spending), the Local Tax Bureau reviews the distribution of tax sources based on how the state and regions should divide the work among them, thereby working to enhance local taxes.
Also note that the transfer of tax sources from the state (income tax) to the regions (personal inhabitant tax) began in the amount of 3 trillion yen in 2007.
Building a local tax system with low eccentricity and stable tax revenues (Figs. B and C)
The services rendered by local associations are familiar in our lives. In view of the huge projected increase in expenses related to social welfare that supports regional welfare and related regional affairs in the future, one must avoid creating a great gap among regions and consider the significant influence of changing business.
It is therefore important to establish a stable local tax system that is slightly biased among the regions and not susceptible to changes in business, as well as enhancing local consumption taxes and other key taxes of local associations.
The Outline of the Taxation System Revision of fiscal 2011 (approved at the Cabinet meeting on December 16, 2010) recommended that reforms be conducted toward establishing a local tax system with a little bias regarding tax sources and stable tax revenues in promoting regional sovereignty reforms. It also recommended that reforms be conducted to expand "voluntary judgment" and the "responsibility of execution" in the current local tax system, in order to establish inhabitant self-rule and promote regional sovereignty reforms through the taxation system.
To promote reforms in regional sovereignty, reforms will be promoted in the local tax system to establish a good local tax system and inhabitant self-rule.
In order to proceed with reforms in regional sovereignty and for other purposes in the future well, the LTB will work to enhance and step up the voluntary sources of the regions, including local taxes in line with this outline.
*eLTAX website: http://www.eltax.jp/
January 2005 saw the launch of the service under the Local Tax Portal System (eLTAX). The eLTAX is a system for electronically following various formalities related to local taxes on the Internet.
Declarations, applications, payments, and other formalities for local taxes have had to be filed with the respective local authorities to date. By using the eLTAX, citizens can now complete these formalities with the respective local authorities through a single electronic contact.
Today, the eLTAX system allows people to follow procedures for declaring and filing two corporate taxes and other taxes, paying taxes electronically, submitting a wage payment report regarding personal inhabitant tax and a payment report for public pension premiums and other fees, along with other procedures. All prefectures and about 80% of all municipalities provide electronic declaration and other services (as of April 2011).
In January 2011, such a system was also established to enable regional taxation bureaus to send income tax return data to local associations electronically, in an attempt to increase efficiency in taxation-related clerical work.
Efforts to provide electronic tax return and other services to more associations from time to time will continue, in an attempt to increase taxpayer convenience even further and increase efficiency in clerical work regarding taxation.
The eLTAX is operated by the Local Tax Digitalization Council, which consists of the representatives of local associations.