By Suzuka YOSHIDA

TOURISM is an industry that earns foreign currency while staying in the country. Japan, which became the number one “country hoping to visit” in questionnaires around the world, finally resumed accepting tourists on June 10. Hotels, restaurants, travel agencies, and local governments have been suffering from a decline in income because the accommodation, food, and transportation costs paid by tourists have fallen to less than 10% nationwide for two and a half years. There are many tourist destinations waiting for the arrival of foreign tourists, and in particular, Kyoto City is waiting for foreign tourists, both in terms of administration and citizens. This is because the city of Kyoto has a swelling budget deficit and issued a warning to the citizens last August that it would collapse if it stays the same. Nowadays, there is a debate among Kyoto citizens, parliament, and religious officials over measures how to eliminate the budget deficit.

The budget deficit of US$ 6,618

In August last year, Kyoto City made a shocking announcement that it was in a budget deficit of 860.4 billion yen (≒ US$6,618 million). Kyoto city warned the citizens that the financial collapse is near and that the general tax revenue of Kyoto City is 284.7 billion yen (2021), which has more than three times the debt.

The total revenue of Kyoto City is 1.005 trillion yen (≒ $7.7 billion), and the city tax collected from citizens is 28.5 per cent (284.7 billion yen ≒ $2.2 billion), which is less than 30 per cent. Others are barely made up of Kyoto City with grants of 21.1 per cent from the National and Kyoto prefectures, Tax Revenues distributed to local government of 5.1 per cent from the national government, bond issuance of 8.9 per cent, and local transfer tax of 5.2 per cent.

On the other hand, expenditures are 32.0 per cent (320.7 billion yen ≒ $2.47 billion) of social welfare expenses, which is higher than the tax revenue collected from residents, and the amount is increasing year by year as the ageing of Kyoto residents progresses. The next largest are industrial-economic expenses 24.1 per cent (241.1 billion yen ≒ 1.85 billion dollars), education and culture expenses 11.7 per cent (116.4 billion yen ≒ 900 million dollars), and urban construction expenses 7.8 per cent (77 billion yen ≒ 600 million dollars). Health and hygiene expenses continue to be 6.5 per cent (64.9 billion yen ≒ 500 million dollars). Expenditures include subway construction costs and bus route maintenance costs. There is still debate about whether the subway is really needed as a means of transporting tourists to various zones of the city. Moreover, since these transportation fees are provided to the elderly almost free of charge, it is natural that social welfare costs should rise.

What should be prioritized on luxury equipment or residents’ services

Since the city of Kyoto announced last August that there was a risk of bankruptcy, residents, the city administration, and the city council have begun to argue for responsibility on how to eliminate the risk of bankruptcy.

First of all, it was pointed out that taxes were not used correctly. The renewal of the city council hall in Kyoto City cost 15.9 billion yen (≒ 122.3 million dollars), and the elevator door of Kyoto City Hall was renovated for 5 million yen (≒ 3,846 million dollars). It was criticized for having a tea ceremony room to entertain foreign guests. The city administration explained, “It is needed to appeal to overseas guests for the traditional techniques using lacquering and gold leaf done by Kyoto residents.” Residents, on the other hand, commented that “it is not necessary to show expensive technology to only a few overseas guests in a year” and “anachronism”.

Certainly, many traditional craft engineers live in Kyoto. They make a living by making simple items that can be lined up in souvenir shops, but it is certain that they sometimes want the opportunity to show off their full-scale techniques in order to improve their skills. The art market is established only if there is a client (orderer) who places such an order, and the artists can exhibit their ability on a full scale. Unfortunately, the ordering party that existed before World War II has disappeared in modern times. Someone needs to give an order for craft engineers to keep their technology.

But with social welfare costs exceeding city taxes, does the city need to be a client? The parliamentarians who made a decision on the order have prioritized traditional crafts over social welfare.

Taxation on temples and shrines is taboo

Resolving the budget deficit requires efforts from two perspectives: tax increases and service reductions, but both are painful and very few people respond to tax increases or service reductions. Even though the amount of tax per capita of Kyoto citizens is lower than the national average, they are exchanging “Take tax from others” and “City should not reduce residents’ services and public services”. It is no longer possible to maintain resident services without raising taxes.

ious corporations has long been controversial. The Japanese tax system stipulates that religious corporations are exempt from taxation, and shrines and temples do not pay taxes. There are about 186 shrines and 1,410 temples in Kyoto city, and all tourists’ worship fees are received by the shrines and temples. More than 30 years ago, once taxed, the temple refused to accept a tax on worshipers and went on strike for several years. Being such a stubborn actor, Kyoto City is unable to cut out taxes. However, even though religious corporations are non-profit corporations, there are little by few opinions that they should be able to pay taxes because they benefit from the public buses and subways operated by the city.

It was very lucky that a certain citizen made a donation of 1.54 billion yen ($118.5 million) to Kyoto City, which made the Kyoto City Administration a little relieved. However, donations are only temporary and cannot be relied on.

The average life expectancy for Japanese is 81.6 years for men. The woman is 87.7 years old. Now that the residents are ageing and the industrial population is declining, there is no resource for the deficit finance to improve in the future. The true value of Congress is being questioned as to whether they can put all possibilities on the table without any taboo for tax collection.