Economic Impacts of the Intergovernmental Fiscal Transfers

The local government financial sources depend on the intergovernmental fiscal transfers such as national treasury disbursements and local allocation tax. In recent years the decentralization is being discussed actively. And then, there is an assertion that fiscal transfers to the local government from the central government should be reduced, and it should be transferred to the independence revenue sources such as local taxes. We can get some analysis results that it should be transferred to the independence revenue sources in each place from resource allocation function. But it is thought that inter-regional income redistribution function becomes weak on one side, and that lack of the annual revenue arises in weak region of the economic structure.In this paper, We present an input-output model in consideration of fiscal transfers to the local government from the central government. And it is possible that the regional economic impacts when it cut fiscal transfers, a local independence revenue source was raised are analyzed by the application of this model. We analyzed the economic impacts of a tax source transfer to the local taxes from the local allocation tax about Kagoshima Prefecture and Aichi Prefecture. It was shown that it decreased in the amount of net product of Kagoshima Prefecture when it was transferred to the independence revenue sources from the local allocation tax. And it increased in it of Aichi Prefecture.