Subcommittee on Ideal Government and Organizations (Fourth Meeting)

Thursday, May 20, 2004

Meeting Agenda

Matters concerning ideal government and organizations (the ideal division of powers between the central and local governments, with special reference to the right to levy independent taxes)

After a statement was heard from Mr. TSUJIYAMA Takanobu concerning the above matters, questions were put to him. This was followed by free discussion among the members.

Informant

  • TSUJIYAMA Takanobu, Senior Research Fellow, Japan Research Institute for Local Government

Members who put questions to Mr. TSUJIYAMA

Main points of Mr. TSUJIYAMA's statement

1. The effectiveness of the Comprehensive Decentralization Law

>> The law was designed to abolish or relax central administrative control by abolishing the system of directives, but this measure has proved insufficient, with the exception of some local bodies. Administrative control is still being exercised from the center by means of advice and recommendations.

>> Each Minister issues criteria, in the form of Cabinet orders, ministerial ordinances, and notifications, for the handling of legally prescribed transactions entrusted to municipalities. These criteria can restrict the freedom of municipal governments. To remedy the situation, I would suggest revising Article 14, Paragraph 1 of the Local Autonomy Law along lines consistent with Article 94 of the Constitution.

>> In some cases, local assemblies have been revitalized by, for example, making active use of the provision of Article 96, Paragraph 2 of the Local Autonomy Law, which allows an assembly to pass ordinances stipulating matters that it is empowered to decide in addition to those set forth in Paragraph 1 of Article 96.

>> The mood in favor of decentralization is leading to the enactment of "basic ordinances for self-government," which are a kind of constitution at the local level. The groundswell toward active citizen involvement in enacting ordinances can also be seen as an indirect effect of the decentralization reforms.

>> A municipal merger in the true sense should create a new community. Currently, however, municipal mergers are being promoted largely as a way out of local bodies' financial difficulties, and it is feared that this may undermine the progress made by efforts toward decentralization.

>> Ironically, among small municipalities that are unable to take part in mergers, there is a growing movement towards "self-reliance" in the true sense, for example, efforts to streamline local government with a view to "living within one's means."

>> A number of issues should be considered as part of a second round of decentralization reforms, including: (a) determining the ideal sources of tax revenue, including reviewing the adequacy of the "trinity reforms" of local public finances now in progress (i.e., reducing national subsidies to local governments, reviewing tax grants to them, and, at the same time, transferring some tax revenue sources to local authorities); (b) establishing a body to oversee the density of regulation by Cabinet orders and ministerial ordinances; and (c) simplifying the Local Autonomy Law. In addition, there is a need to enact a "Basic Law for Local Autonomy."

2. The ideal division of authority

>> In relation to the division of powers between the central and local governments, the status of "the right of self-government" should be clearly established, both by law and in the Constitution. This right should (a) include, in principle, the right to regulate all local affairs, (b) be granted primarily to the basic units of local government, and (c) include the right to decide which tasks to perform and which powers to exercise. Further, tasks that a local government decides not to perform should go to a broader regional level, i.e., the prefecture or the national government, according to the principle of subsidiarity (which means that, as far as possible, functions that can be performed locally, at the level closest to the citizen, should be carried out at that level, and when this is not possible, they should be performed in a supplementary role by the prefecture, if possible, or by the national government). Once a clear correspondence is established between each function and the body responsible for it, the concept of "legally prescribed transactions entrusted to municipalities" will cease to exist.

>> The "Basic Law for Local Autonomy" should stipulate the matters to be prescribed by a "basic ordinance for self-government." In this connection, I think we should establish a special measures law concerning the powers of local governments, to authorize exemptions from certain statutes.

3. The provisions of the Constitution

>> Local governments today face a number of problems: the density of statutory regulation, centralized administrative control, and problems in the tax and fiscal systems. As a general rule, however, I do not think that the development of local autonomy is being held back by any deficiencies of the Constitution.

>> If I had to revise some part of the Constitution, in Article 93 there is room to consider allowing local bodies a choice as to whether or not they adopt the dual system of representation, in which both the chief executive officer and the assembly are chosen by direct popular election. At the same time, it would be possible to establish the "right of self-government" by introducing a system in which the organization of the local entity (including its representative body), the tasks for which it is responsible, the taxes it levies, and related matters are set forth in a charter, like those adopted by states in the United States, and the charter is approved by the Diet.

>> Since local governments lack adequate sources of tax revenue and there are limits to what can be achieved by transferring tax sources, unless Japan adopts a federal system, the central government must inevitably take responsibility for adjusting revenues among local governments so as to guarantee a national minimum standard of living. The ongoing "trinity reforms" are inadequate in this regard, as the tax revenue transfers have not kept pace with the reductions of subsidies, and the reforms are thus leading to a growing disparity in public finances among the regions.

4. The debate about the proper size of local governments

>> The proper size for a local government is still open to debate. I do not think that population size should be the sole criterion. The key question is to what extent a particular local entity can become self-governing. Its powers, its revenue sources, and the amount of work for which it is responsible should all be taken into account.

>> The 28th Local Government System Research Council is studying the proposed do-shu system. I am concerned that municipal mergers are currently being promoted among small local governments while the do-shu concept remains unclear.

Main points of questions and comments to Mr. TSUJIYAMA

NODA Takeshi (Liberal Democratic Party)

>> I think that at the time when the Comprehensive Decentralization Law was passed, there was an awareness that municipal mergers were needed because municipalities could not cope with their growing administrative responsibilities with their existing staffing and structure, but unfortunately this has now given way to the idea that mergers are needed because of financial problems. Would you like to comment?

>> We speak of transferring tax revenue sources, including the right to levy independent taxes, but the problem is that local governments tend to have few sources of tax revenues. The idea that the national government should adjust finances between regions to guarantee a national minimum standard of living is one possible approach, but what do you think of the idea of allowing each local government more freedom to set its own tax rates by ordinance, rather than imposing the uniform rates that are presently prescribed, in principle, by the Local Tax Law?

>> If local governments claim the right to levy independent taxes, doesn't it follow that it should be their own responsibility if they choose to apply tax rates in excess of those prescribed by the Local Tax Law?


GENBA Koichiro (Democratic Party of Japan and Club of Independents)

>> The ongoing "trinity reforms" have been called "a miscellany of changes for the worse" and "the national government shifting its budget deficit to the regions." Among other problems, the reforms amount to only about one trillion yen in value. I see nothing positive in the "trinity reforms," but I would like to hear your assessment of them.

>> As I understand it, a federal system is one in which each federated state holds judicial power, in addition to the other powers, but in my view it would not be possible to adopt such a system by revising the existing Constitution. It would be necessary to enact a new Constitution. Do you agree?

>> I think that Article 93 of the Constitution should be revised to permit the adoption of more diverse forms of local government, such as a city manager system. Do you agree?

>> What do you think about making explicit provision in the Constitution for such matters as local taxes and the principle of subsidiarity?


SAITO Tetsuo (New Komeito)

>> With regard to the optimal system for funding compulsory education from the national treasury, I believe that the national government should bear the costs of education, and I do not think that they should be disbursed in the form of general revenue appropriations so that the burden falls on local governments. What are your views on this point?

>> At present, the cost of books for schools is covered by the local allocation tax, but the fact is that it merely forms part of the basis for calculating the allocation as a whole; this does not mean that a specific amount is earmarked for school books. In my view, the cost of books should be reliably guaranteed by the national government as part of a national minimum standard of living. Would you like to comment?

>> In the present electoral system for heads of local government, I think it is problematic that a candidate's ability to win election is no guarantee of his or her managerial ability. In this connection, I would like to hear your views on the city manager system.


YAMAGUCHI Tomio (Japanese Communist Party)

>> Am I correct in understanding that (a) you see a problem on the national government's side with regard to the status of local governments, and (b) in light of the movement to enhance resident self-government through community development ordinances and "living within one's means," you see local politics as capable of realizing the "spirit of local autonomy" for which the Constitution provides?

>> Would you explain the main elements of "the concept of a Basic Law for Local Autonomy," which you were involved in drawing up?

>> The Comprehensive Decentralization Law took those powers under the Law for Special Measures for Land Expropriation for U.S. Military Bases that were formerly agency-delegated tasks and placed them under the direct jurisdiction of the national government. I think this change is problematic in relation to Article 94 of the Constitution. Would you like to comment?

>> I think that the Constitution of Japan ushered in a new era by providing for local autonomy, as there were no such provisions in the Meiji Constitution. I would like to hear your thoughts on the role that the Constitution's provisions for local autonomy have played so far and what those provisions mean in the 21st century.


TERUYA Kantoku (Social Democratic Party)

>> We are now at the stage where the Comprehensive Decentralization Law is in force and decentralization is under way. You have put together a "concept for a special system of self-government for the Ryukyu Islands." What are your views on the present state of self-government in Okinawa?

>> I see no need to revise the Constitution in order to realize "the concept for a Basic Law for Local Autonomy," which you were involved in drawing up. What are your views on this point?

>> I would like to hear your thoughts on the significance of "the concept for a Basic Law for Local Autonomy" now that the Comprehensive Decentralization Law has entered into force.

>> Please comment on how local autonomy in Okinawa compares before and after its reversion to Japanese sovereignty.


FUTADA Koji (Liberal Democratic Party)

>> You proposed allowing exemptions from certain statutes as stipulated in a local body's "basic ordinance for self-government," which would be laid down in accordance with a "Basic Law for Local Autonomy." I would like to hear your ideas on the scope of such exemptions and the concrete procedure for recognizing them.

>> You cited granting minors the right to vote in local elections as an example of such an exemption. In terms of ideal government, however, I think this would be unworkable, as it would result in a lack of consistency at the national level on a structural question of great importance. Would you like to comment?

>> As you have pointed out, the ongoing municipal mergers are likely to result in a loss of substance at the level of prefectural government. Wouldn't it be more efficient to discuss abolishing the prefectural system, rather than creating a federal system or a do-shu system? In the future, won't both prefectures and do-shu be unnecessary?


INAMI Tetsuo (Democratic Party of Japan and Club of Independents)

>> The ongoing decentralization reforms are inadequate. We should first enact a "Basic Law for Local Autonomy," and then each local entity should proceed according to a "basic ordinance for self-government." What do you think about setting forth the essence of the "Basic Law for Local Autonomy" in the Constitution?

>> Please describe the contents of the "right of self-government" that you advocate, and tell us your views on a constitutional provision stating that this right is to be granted primarily to the basic units of local government.

>> If decentralization is to be promoted, we need to expand the right of local bodies to levy independent taxes. Is it necessary to establish a new provision in the Constitution in order to take decisive steps to expand this right? Also, what constitutional provisions would be necessary if we were to introduce a structure in which the do-shu collect taxes and hand over a certain proportion to the national government, both to cover its own needs and to adjust revenues among the do-shu?

>> Are any new constitutional provisions required in order for the do-shu to have the right to levy taxes, or for the basic units of local government to carry out discretionary taxation? Or is the national government's authorization all that is required?


NAGAOKA Yoji (Liberal Democratic Party)

>> Government employees currently form an inverted pyramid, i.e., their numbers are greatest in the central government while the local level remains understaffed. As decentralization goes ahead, local governments will need to obtain enough human resources to carry out the work for which they are given authority. As I see it, this is another reason why the central government must inevitably take the lead and encourage municipal mergers to bring the basic units up to a population of 200,000 to 300,000. What are your views in this regard?

>> Is converting to a do-shu system a process that Japan must pass through in order to strengthen the basic units of local government? Also, if we decide to introduce such a system, what powers should be granted to the do-shu?

>> Because of the dual nature of the system of governance at the local level, with both the chief executive officer and the assembly directly elected by residents, I think that the assembly's powers are weak. I would like to hear your views on introducing a committee system or a city manager system in order to increase the options for local governments.

Main points of comments by members in the free discussion (in order of presentation)

TERUYA Kantoku (Social Democratic Party)

>> In thinking about the Constitution and the ideal form of local autonomy, we cannot avoid the issue of U.S. military bases.

>> The Japan-U.S. Status of Forces Agreement stipulates that Japanese domestic law shall be respected, but there are major problems. To name just a few, U.S. military personnel do not have to pay the automobile tax, and emergency vehicles cannot pass through a base. Further, the Law for Special Measures for Land Expropriation for U.S. Military Bases applies, in effect, to the landowners in Okinawa, but when it was enacted, there was no local referendum as stipulated in Article 95 of the Constitution.

>> As we promote decentralization, we should consider adopting a variety of forms of local government within the framework of the Constitution, in what one might call "one country, many systems."


MASHIKO Teruhiko (Democratic Party of Japan and Club of Independents)

>> As Mr. TSUJIYAMA noted, in spite of ongoing decentralization, in practice, the adverse effects of central control by notification still linger on. In future, as decentralization progresses, this is likely to be a growing problem.

>> The powers of local governments will increase with decentralization, but if a head of local government is in office for multiple terms and acquires expanded powers, the result could be something like a dictatorship, which would distort local autonomy. We should consider ways of applying a brake to this tendency, such as setting term limits for heads of local government while striking a balance with the freedom to run for office.


SAITO Tetsuo (New Komeito)

>> I was reminded of the importance of transferring powers and revenue sources in promoting decentralization. Further, if decentralization is to have real substance, the economic activity which at present is centralized in Tokyo must be dispersed more widely.


NAKAYAMA Taro, Chairman

>> When the han system was abolished and the prefectures were established in the Meiji Period, borders were often drawn on the basis of natural features such as mountain ranges and rivers. With the development of expressways and communications after World War II, however, people began to live their lives in a geographical zone that spanned more than one prefecture, and we now face the problem that the prefectures are too small.

>> In the future, if we adopt a do-shu system, on the one hand we will need projects such as road improvements to deal with the expansion of this living zone beyond the individual prefectures. On the other hand, paradoxically, each prefecture knows little about what is happening in the others, for example, the state of their finances, and there is a need for residents and the central government to work together to solve this.


TSUJI Megumu (Democratic Party of Japan and Club of Independents)

>> The proposed revision of the Administrative Litigation Law that is now before the Diet is inadequate, as it does not address such problems as the rigid criteria for the standing to sue. The system should be improved to allow a broader range of litigation, including inter-institutional lawsuits and class action lawsuits.

>> As government grows ever larger, there is a need to control it in various ways. Decentralization is important for that very reason, and the significance of the resident self-government called for by the Constitution should be developed further. In community development, what is needed is consensus from below, at the level of personal contact. Mr. TSUJIYAMA made some valuable points regarding the need for "community development ordinances" and so on.

>> We should allow the representative bodies within the basic units of local government to take more diverse forms, replacing the present dual system with different options and permitting the adoption of charter systems, etc.

>> The right to decide which tasks they will perform should be granted primarily to the basic units of local government. At the same time, with a view to establishing the right of self-government, we should rethink the status of the right to levy independent taxes and the right to enact ordinances.