Nov 02 (the-japan-news.com) - The Finance Ministry has recommended revising the criteria used for the distribution of consumption tax revenue among the prefectures to rectify disparities between urban and rural areas.
The opinion was issued at a Tuesday meeting of a subcommittee of the Fiscal System Council, which advises the minister.
The ministry will consider changing the current formula, which uses the amount of consumption in each prefecture as the main criterion for distribution, to put more emphasis on population, sources said.
The government and ruling parties plan to discuss the changes with an eye to including them in a revision of the tax system in fiscal 2018.
The consumption tax rate is 8 percent. Revenue from 6.3 percentage points of that goes to the national government and revenue from the remaining 1.7 points is distributed to local governments. In fiscal 2015 the locally distributed revenue came to about ¥5 trillion.
Under the current criteria, 75 percent of the revenue for local governments is distributed based on the amount of consumption in each prefecture, while 17.5 percent is distributed based on population.
