• Kyodo

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The government plans to revise its basis for distribution of local consumption tax revenues that is currently concentrated in urban areas, to ease disparity and enable regional governments to increase tax income, government sources said.

In the planned revision, the government will look to exclude sales from mail-order operators, including internet retailing, from the distribution calculation standard, which books retail sales in accordance with locations of retailers.

Under the current tax system, sales tax income from mail-order and internet retailers is allocated to places where sellers are based, even if products are purchased by residents of other areas.

The government plans to decide specifics by the end of this year and revise the tax system law for fiscal 2017 starting next April, with an eye to adopting the new standard from May 2017 at the earliest, the sources said.

The move, which responds to requests by local governments, comes as the government of Prime Minister Shinzo Abe aims to revitalize regional economies to pursue stable growth throughout the country.

Some government officials have called for emphasis to be placed on population rather than corporate sales when allocating regional consumption tax in addition to excluding mail-order retailing from the standard, the sources said.

Of the 8 percent consumption tax, 6.3 percent is accounted to state tax and the remaining 1.7 percent to local tax, which will be collected by the central government and distributed to local governments based on the calculation standard.

In fiscal 2014, the tax income collected per resident in Tokyo was 29.7 percent higher than the national average and 8.3 percent higher in Osaka Prefecture, according to the Internal Affairs and Communications Ministry.

But the figures in regional governments were low, with Okinawa 25.0 percent below average.

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