Fiscal Decentralization and Local Public Finance in Japan

Abstract

This book is perhaps the first English language publication that explains, in full detail, Japan's local government finance. It is a handy reference book that introduces the historical development and institutional features of intergovernmental fiscal relations in Japan. Since the book is intended for both academics and practitioners, the materials covered are presented in a non-technical way. In many ways, Mochida's book provides an original contribution to the literature on Japan's local government finance; readers will learn a lot from his discussion of value-added taxes in particular. After surveying the historical development of Japan's local government finance in Chapter 1, Mochida locates it in international comparative perspective. Mochida's attentive cross-national comparison between Japan and other advanced industrial democracies, in particular Nordic countries, clarifies which institutional features define the Japanese system. Chapter 2 is specifically reserved for this comparison, where Mochida identifies key similarities and differences between Japan and Nordic countries. For instance, Japan and Nordic countries stand out among Organisation for Economic Co-Operation and Development (OECD) economies in terms of having relatively large local government expenditures, although vertical imbalances in the tax revenue structures make Japan's local government finance distinct from the Nordic systems. By carefully examining key fiscal statistics, Mochida successfully points to the pathology of Japanese local government finance, in particular the lack of electoral accountability and weak fiscal discipline.