Types and Use of Joint Collection of Claims Owed to Local Governments

This paper focuses on the joint collection of claims (under both public and private law) owed to local governments and seeks to identify the types of joint collection practices through four examples (Kyoto Regional Tax Organization; Kobe City, Hyogo; Matsuura City, Nagasaki; and Akabira City, Hokkaido).

Today's local governments often suffer more from National Health Insurance premiums delinquency (taxes) than local tax delinquency. Various outstanding claims owed to local governments, such as unpaid medical bills for public hospitals and outstanding loans to small and medium sized enterprises have become a significant issue.

Since individual claims have their own dedicated departments, it would be best if claims could be collected by their respective department. However, recent economic conditions and the financial standing of local governments have required local governments to create every possible opportunity to collect claims and make a concerted collection effort across the organization (or together with other local governments).

The claims owed to local governments have a complex structure. There are examples of public claims that can be forcibly collected as local taxes, such as National Health Insurance premiums, nursing care insurance premiums, and day nursery fees. Another kind of public claim are those that cannot be forcibly collected, such as refunds of public assistance benefits and kindergarten fees. The latter are claims under private law, such as public housing rent, water charges, and loans. The approach to delinquencies depends on whether they are public claims subject to compulsory collection.

However, whether under public or private law, claims owed to the local government are simply viewed as debt payable to the local government from the viewpoint of the residents. In fact, few residents may understand the real structure of the claims as managed by the local government. Therefore, it would be more convenient to the residents if they could make all payments to the local government in one place. A single bill listing every outstanding payment to the local government for example would also be helpful.

The author believes that all kinds of claims owed to a local government should be consolidated into a single type of public claim that can be forcibly collected. Even if this is not viable, centralized collection is recommended because collection can technically be unified. Likewise, the author believes that joint imposition is viable if data transactions can be shared just like the different airlines work together in areas such as mileage cards or code share flights.

The author presented a classification of joint collection in the July 2009 issue of the monthly journal Zei (Tax). Since then, a number of local governments have put their original ideas into practice, creating many methods of joint collection. This paper will attempt to introduce and explain the current collection methods being used by local governments....