Labeling a controversial tax proposal submitted Wednesday to the metropolitan assembly "a challenge from Tokyo," Gov. Shintaro Ishihara opened the legislature's regular session with a call for local autonomy. He also blamed the nation's top-down political and administrative systems for what he called Japan's "crisis situation." "(They) have blocked the independence of local governments, firms and individuals and have discouraged ... new ideas and the drive to challenge (the status quo)," Ishihara said. "Present-day Japan has lost its ability to decide its own fate." The proposed tax would take 3 percent of the gross profits of large banks that operate in the metropolis, and it has become the major item on the assembly's agenda. During a 45-minute policy address, Ishihara said the measure is the result of a decision to have "Tokyo lead in the exercise of (local governments') taxation rights, which he said form the basis of local autonomy. "In a time of recession, it is even more imperative that we break through institutional constraints that have been taken for granted until now." The tax is intended to secure a stable source of revenue for the deeply indebted metropolis and is somewhat symbolic of the increasing desperation gripping Japan's local governments. But it is only one issue with which Ishihara is taking the central government to task. He is also focusing on environmental and health issues, calling 2000 "the first year of regional sovereignty." It is not enough for local governments to ask the central government to pass laws, he said, "they must act independently and move the nation and industries." The governor then reiterated his determination to follow through with a plan to obligate all diesel-powered vehicles running in the city to be equipped with diesel particulate filters that will reduce emissions by 2006. "The nation's efforts concerning diesel-engine (restrictions) have been inadequate," he said, calling for a full-scale "environmental revolution, starting with Tokyo." He also announced plans to establish municipal-run day-care centers that would open early in the morning and 24-hour emergency-care systems at metropolitan hospitals. But so far the tax plan has drawn all the attention and not surprisingly it has come under fire from financial circles, which maintain that it runs counter to the central government's efforts to stabilize the nation's financial system by shoring up the capital bases of financial institutions. In his defense, Ishihara pointed out that the central government has spread a large safety net under the financial system that includes 10 trillion yen in public funds to help banks dispose of bad loans, "which should be taken care of by the banks themselves in the first place." With major parties in the assembly already in favor of the tax, the draft ordinance is expected to be passed unchanged on March 30. Committee deliberations and hearings on the draft begin today. Assembly members plan to hold a public hearing, the date of which has not yet been decided, during the proceedings. Tokyo's move has accelerated debate at the central government level on introducing similar local corporate taxes across the nation. Officials of the ruling Liberal Democratic Party said Tuesday that they plan to introduce such a tax in fiscal 2001 at the earliest. Tokyo's new tax is expected to go into effect April 1. The LDP plans to set legal limits for firms subject to the tax as well as an upper limit on the tax rate that would take economic conditions into consideration, the officials said. The LDP says it will reach a conclusion on the issue by the end of the year, when it will decide on tax reforms for fiscal 2001, which ends in March 2002.
