Local Governments in Japan Experience Fourth Consecutive Year without Tax Allocations
In a significant development, the town of Kikuyo in Kumamoto Prefecture has become a non-recipient of tax allocations from the state in fiscal 2025. This milestone marks the town's financial independence, joining the growing number of self-sufficient local governments in Japan.
Kikuyo's financial status is primarily bolstered by its local tax revenues, which have seen a substantial increase due to the presence of a plant operated by Taiwan Semiconductor Manufacturing Company (TSMC). The robust performance of corporations in Kikuyo has contributed to this growth, resulting in higher municipal tax income.
The town's financial independence is not unique within Japan. In fiscal 2025, 85 local governments, including cities, towns, and villages, will be able to operate their finances independently of state tax allocations. This marks an increase of two from the previous year, and the number of self-sufficient local governments has increased for the fourth consecutive year.
The Japanese Internal Affairs Ministry announced these figures on Tuesday, with Internal Affairs Minister Seiichiro Murakami reporting on the tax allocations at the cabinet meeting. The ministry also decided the amounts of fiscal 2025 ordinary tax allocations to be given to local governments to supplement any financial shortages.
The fiscal 2025 allocations aim to address any financial shortages in local governments. Tokyo is the only prefecture among the 47 in Japan that does not receive tax allocations.
The town of Kikuyo's new status as a non-recipient of tax allocations is a noteworthy development, particularly given its location in the southwestern prefecture of Kumamoto. The town's financial status may be related to its hosting of a semiconductor plant, which is a significant contributor to its robust corporate performance.
This shift towards financial self-sufficiency is a testament to the strength of local economies in Japan, and it is expected that more local governments will follow in Kikuyo's footsteps. The town's success story underscores the potential for local economies to thrive when given the opportunity to manage their own finances.
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- The Photo of the town of Kikuyo, with its thriving semiconductor plant and bustling business district, could serve as a powerful symbol of financial independence within the Japanese industry.
- The robust performance of corporations in Kikuyo, such as the Taiwan Semiconductor Manufacturing Company (TSMC), has not only boosted the town's finances but also attracted attention from the finance sector, indicating growing interest in Kikuyo's unique business model.
