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Chapter 5 Public Finance
This chapter contains statistics on national government finance: revenue and expenditure of general accounts, special accounts and government-affiliated organizations; national tax; government debts; fiscal investment and loans; and state-owned assets. It also contains statistics on local government finance: revenue and expenditure of ordinary accounts and public enterprise accounts; local tax; distribution of local allocation tax; local bonds; and the administrative investment.
National government finance
(1)General accounts, special accounts and accounts of government-affiliated organizations
The national accounts are classified into general accounts and special accounts. In addition, there are accounts of government-affiliated organizations. Budgets and settlement of accounts are also classified into these categories. These three budget plans and their settlement are presented to the Diet together. The sources of data used in this section are the "Budgetary Statistics" and "Monthly Statistics of Government Finance and Banking (Special issue on Budget)" in which the Ministry of Finance provides the information of budgets and their settlement in each fiscal year.
Revenue for general accounts includes taxes, stamp duties, monopoly profits, profits and revenue from government enterprises, sales of state-owned assets, miscellaneous receipts (income from the use of state-owned assets and receipt from the Bank of Japan), sales of public bonds and carry-over of surplus from the previous fiscal year. Expenditure is budgetary spending in connection with the basic general administration of the national government such as social security, education, national defense and public works.
Special accounts are established by law for specific projects or for control of special funds in order to distinguish their revenue and expenditure from the general accounts. There were 32 special accounts in FY 2002.
A government-affiliated organization is a separate corporation from the national government, but it is a special institution fully funded by the national government. Its budget and settlement accounts are subject to the deliberation of the Diet as a quasi-governmental organization. For instance, the National Life Finance Corporation, Government Housing Loan Corporation and Japan Finance Corporation for Small Business fall under this category.
Taxes can be categorized into national taxes and local taxes depending on who is responsible for payment. Taxes are also often divided into direct tax and indirect tax. A person who pays direct tax pays tax to the government directly as income tax, corporation tax and inheritance tax. On the other hand, a person who pays indirect tax does not pay the tax directly to a government but pays tax such as consumption tax and liquor tax.
Taxes can be also divided into general tax and earmarked tax, which is appropriated to specified financial resources. Local road tax, urban planning tax and light oil delivery tax are typical examples of earmarked tax. The data in this are taken from the "Budgetary Statistics" and "Monthly Statistics of Government Finance and Banking (Special issue on taxes)" issued by the Ministry of Finance and the "Annual Statistical Report of the National Tax Administration Agency" compiled by the National Tax Administration Agency.
The national government debts include government bonds, short-term government securities, borrowing and temporary borrowing. The government bonds are divided into domestic bonds and foreign currency bonds depending on the place where the bond is issued. They are also classified into construction bonds, which are issued to finance public works based on the provisions of the Public Finance Law and special deficit-financing bonds, which are issued to finance a revenue shortfall based on the provisions of a special law. The source of data is the "Annual Report of Government Bonds."
(3)Fiscal investment and loan
Fiscal investment and loan is a system in which the national government finances large-scale projects and supplies long-term funds, that private financing institutions, in order to implement its policies, using the funds collected can not be provided by the national system and credibility. The government supplies the funds to special accounts such as the national hospital account, government-affiliated organizations such as the National Life Finance Corporation, public corporations such as the Japan Highway Public Corporation, and local public bodies. The sources of data are the "Budgetary Statistics" and "Monthly Statistics of Government Finance and Banking (Special issue on national investments and loans)."
Properties owned by the national government include a wide variety of assets such as cash deposits, fixtures and equipment, credit, land and buildings. In principle, they are recorded at their acquisition costs in the inventory of national properties. They are revalued every five years as of March 31 to revise the prices recorded in the inventory. The source of data in this section is the "Monthly Statistics of Government Financial and Banking (Special issue on national properties)."
Local government finance
(1)Ordinary accounts and public enterprise accounts
They are the statistics pertaining primarily to the accounts of prefectural governments, municipal governments, special districts and administrators' associations. The accounts of each local public body are divided into general accounts and special accounts as in the case of the national government. The scope of the general account, however, varies with the local public body. Hence, when they are compiled as local public finance in aggregate, they are not classified into general accounts and special accounts. Instead, they are categorized into ordinary accounts and public enterprise accounts, thereby standardizing the accounts.
Each account is mutually and intricately dependent on each other and overlaps in revenue and expenditure. Therefore, it is necessary to subtract overlapping portions and use the net total to grasp the overall picture of public finance. Various net totals are compiled not only within national government finance accounts and local government finance accounts but also for combined accounts of national government finance and local public finance and government-affiliated organizations.
Local taxes can be divided into prefectural tax and municipal tax depending on who is responsible for taxation. Each tax is further divided into ordinary tax (prefectural tax and municipal tax, etc.) and earmarked tax (automobile acquisition tax and urban planning tax, etc.). Data here are derived from the "Annual Statistical Report on Local Government Finance" issued by the Ministry of Internal Affairs and Communications.
The general financial resources of local public bodies include the distribution of local allocation tax, local transfer tax and extra-distribution of local allocation tax as well as local taxes. In the system of the distribution of local allocation tax, the national government distributes a certain ratio of taxes that it has collected as income tax, corporate income tax and liquor tax to local public bodies, thereby adjusting financial resources among local public bodies through distributing proportionately larger allocations to local public bodies that has lower tax revenue. In the system of local transfer tax, the national government collects taxes as national tax such as local road tax and special tonnage duty and transfers the taxes fully or partially to local public bodies. In the system of the extra-distribution of local allocation tax (since 1999), the national government allocates money to local public bodies to compensate a revenue shortfall caused by permanent tax cuts.
(4)Local government bonds
Local government bonds are issued to finance their public works. The source of data is the "Annual Statistical Report on Local Government Finance" issued by the Ministry of Internal Affairs and Communications.
A local public body is legally restricted in issuing its bonds. It is allowed only to issue bonds to finance expenses required for local public enterprises, equity fund and loan, refunding local bonds, expenses for disaster relief and restoration projects and expenses for construction work of public facilities. A local public body is required to have authorization from the Minister of Internal Affairs and Communications or the prefectural governor.
The source of data in this section is the "Report on Administrative Investments" in which the Ministry of Internal Affairs and Communications summarizes the results of its survey on the record of administrative investment by prefecture conducted each year. The survey covers, in principle, business units that take part in gross domestic public fixed capital formation in the System of National Accounts.