RIETI Symposium

Fiscal Reform of Japan: Redesigning the Frame of the State

Project Paper - Session 5

"Fiscal Reform from the Perspective of Social System Design" (Abstract of Discussion Paper 04-J-015)

YOKOYAMA Yoshinori (RIETI Senior Fellow)

It is fully understood that Japan needs fiscal reform. Despite this, however, no proactive actions to implement reform measures have been seen. Fiscal reform boils down to increasing revenue and cutting expenditures. But no one wants to face the pain this involves, hence the ongoing procrastination. A strategy is needed that can break this impasse and take specific action now. High goals must be set by focusing on "structural changes" and implementing measures through "social system design" to bridge the gap between present conditions and the goal. Specifically, regarding revenue, a "social system" could be introduced to increase the extent to which income is captured for taxation, systematic constraints preventing "structural changes" in the fields of health and medicine could be eliminated, asset management introduced, tourism utilized and a system designed to raise the consumption tax rate in a way that can benefit corporations, consumers and the government. Meanwhile, on the expenditure side, cross-sectoral measures � in contrast to the vertically compartmentalized administrative system and its idiosyncratic budget-grabbing game as seen today � should be implemented by focusing on the social system, thereby enabling the evaluation of policy measures in terms of their cost-benefit performance from the point of view of consumers. To achieve this end, bureaucrats in their 40s should be trained to mastermind operations and placed in the Cabinet Office.

Original discussion papers in Japanese [PDF:444KB] >>