YOKOHAMA — After Tokyo Gov. Shintaro Ishihara announced his controversial plan to impose a local tax on the city's banks earlier this year, other local governments have been searching for new revenue sources to replenish coffers drained by recession.
The trend has been welcomed as promoting the devolution of power, as central government subsidies generally represent large portions of local budgets. (The Tokyo Metropolitan Government receives no such subsidies).
However, local elected leaders face an age-old political problem: how to generate badly needed revenue without angering constituents. Ishihara tackled this by targeting an institution perceived to be able to afford it. Other governments are turning to a variation on sin taxes.