A “forest environment tax” will be introduced in April 2024, the start of that fiscal year. A reasonable case can be made for expanding the government’s financial resources for forest protection, the objective of the new levy. However, a slew of serious flaws stand in the way of how this new tax is to be levied and its revenue distributed. We urge the government to quickly undertake a sweeping review of the plan.

The forest protection tax will be collected by municipalities as an annual addition of 1,000 yen to the fixed and flat part of the residential tax. The tax receipts will then be transferred to state coffers so the funds can be distributed to local administrations under a set of standards. The levy is projected to bring in around 60 billion yen ($487million) in additional annual income to the government.

While the tax has yet to be imposed, the central government started distributing funds to local entities in fiscal 2019 by tapping another revenue source.

A growing swath of mountain forests in Japan are not being tended to properly, mainly due to falling lumber prices, fueling concerns about the nation’s ability to maintain the functions of forests, which play an import role in efforts to stem global warming. In fiscal 2019, the government introduced a system that allows municipal administrations to manage privately-owned forests when the owners have no intention of operating a forestry business. The planned new tax will prove to be of great service to forest protection if the money is used to finance this program.

The question is whether the fresh revenue source will be used effectively.

Of the roughly 50 billion yen provided to municipal governments in fiscal 2019 and 2020 under the forest protection program, 27.2 billion yen, or more than half, was put into a fund as a reserve. Given it takes time to ascertain the intentions of forest owners, some of the money inevitably is bound to lie unused for the first few years. But a fiscal 2020 survey by the internal affairs ministry found that 40 percent of the municipalities had no official in charge of forests and forestry. Half of the municipalities receive less than 10 million yen under this program. Providing such small amounts to local governments not properly equipped to use the funds makes no sense.

The list of the top 10 municipal recipients of funds from the new revenue source for forest protection includes large cities such as Yokohama, which topped the list, as well as Osaka and Nagoya. This is  because 30 percent of the tax receipts are not linked to forestry and distributed according to sizes of population. What is the government’s argument for this unconvincing rule?

Taxes to finance specific policy goals tend to generate wasteful spending because they usually provide fixed revenues that cannot be used flexibly in response to policy needs. If a new tax for a specific purpose is to be established, proper measures should be taken to ensure effective use of the money. But the central government, which will distribute the funds from the new forest protection tax, does not even have the legal authority to require local administrations to stop using the money for unintended purposes.

The system is designed too carelessly and thoughtlessly. The government needs to examine how the budget was used in the past three years and rethink how the money is distributed and executed.

The annual increase of 1,000 yen in the residential tax was originally intended as a limited-time measure to finance the reconstruction of areas affected by the 2011 earthquake and tsunami disaster and scheduled to end in fiscal 2023. Perpetuating this tax increase under the new forest protection program represents a betrayal of a promise to the taxpaying public. 

The fixed and flat portion of the residential tax is often characterized as a “local community membership fee.” This should not be used as a way to raise funds for a national program.

Policy measures to combat global warming should be financed by environmental taxes that help reduce greenhouse gas emissions, such as a carbon tax. Resorting to an easy-to-collect tax causes risks damaging public trust in taxation. We urge the government to reconsider the forest tax plan.

--The Asahi Shimbun, March 28