Devolution and Structural Reform of the Local Government Finance System-In the light of Constitutional Relationship Between the Central and Local Governments

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This research project has been conducted to find out the legal (Constitutional) logic that should be applied to devolution and the necessary structural reform of the local government finance system. To carry out this project effectively, the head investigator took up the so-called "Three-In-One Local Government Finance System Reform"; reform of (1)Local Tax System, (2) Central Government Subsidy System and (3) Local Allocation Tax(Central Government tax revenue allocated to Local Governments) System in one.This "Three-In-One" System Reform did allocate more tax resources to Local Governments, but reduced the amount of Central Government Subsidy and Local Allocation Tax at the same time. As a result, this reform made the distinctive division between the winners and the losers; the winner can enjoy much more financial resources than the loser. This brought not only this severe financial competition among the Local Governments, but also a very serious Constitutional issue. The loser Local Governments cannot provide even "Standard Public Services" and this irreversible policy of devolution now raises an ironical issue, because this creates inequitable provision of public services among inhabitants depending on their domicile. It is needless to say that "Standard Public Services" is designated to maintain the necessary minimum standard of living that should be secured for all citizens as of their fundamental human right to life. It should be maintained in an unitary state like Japan, first of all. by the Central Government and this right of the citizens to life is, of course, affirmed by the Japanese Constitution irrespective of where they live in.