Public Choice Studies
Online ISSN : 2187-3852
Print ISSN : 2187-2953
Articles
The Effects of Hometown Tax Donations on Interregional Fiscal Inequalities at Lower-level Local Governments in Japan
Joongho Kook
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2025 Volume 2025 Issue 82 Pages 1-20

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Abstract

At first, this paper shows the characteristic differences of hometown tax donations between cities, towns-villages, and wards in Japan calculating their descriptive statistics. Next, the paper tests the null-hypothesis that the means of hometown tax donation amounts are same, also the null-hypothesis that their variances are same. According to the results, the two null-hypotheses are rejected at the 1% significance level, which illustrates that their means and variances statistically differ from each other. Finally, we examine the effects of the hometown tax donations at city and town-village jurisdictions on the interregional fiscal inequalities by measuring Gini coefficients. The results reveal that the hometown tax donations worsened the degree of interregional fiscal equalities, especially in town-village localities as well as relatively small populated cities. For instance, the hometown tax donations forced the degree of the fiscal inequality to worsen 18.61% at town-village regions in fiscal 2022 when we compute the percentage changes of Gini coefficients of local tax revenues before and after adding the amounts of hometown tax donations to the local tax revenues.

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