Paper  Finance and the Social Security System  2016.05.19

Computerization of Garnishment of Deposits (e-Garnishment) and Deposit Investigation

ZEI(TAX) published by GYOSEI Corporation on June, 2015


Amid low birth rates and an aging society, local government staffing levels in Japan are gradually decreasing. While in 1994 there were 9.37 members of local government staff (not including educators, police officers, or firefighters) per 1000 residents, by 2010 this number had decreased to 7.31 staff members. Many local governments refrained from new hiring after the collapse of the economic bubble of the 1980s, and these numbers are projected to further decrease in the future. A decrease in numbers of local government staff means that residents' ever-increasing needs must be addressed by even smaller numbers of personnel. It is difficult to imagine a simple increase in the number of personnel assigned to taxation sections in the future.

Further improvement in the efficiency of taxation operations is one way to be ready for such circumstances. Over the past 10 years or so, improvement of efficiency within local government agencies and among local governments has advanced considerably. Examples include centralization of tax collection and joint collection. In addition, with advancement in the use of information technology (IT) an infrastructure has developed that includes eLTAX, convenience-store payments, and credit-card payments. However, room for further efficiency improvements remains. One example is in the area of points of contact with designated financial institutions ("regional banks"). The presence of regional banks is indispensable to local-government administration in a wide range of areas including collection of public funds, issuance of local bonds, and cooperation in collection of delinquent payments. However, inefficiencies in administration long have been pointed out with regional banks. One reason for these inefficiencies is the fact that both regional banks and local governments have been conducting administration in the same ways as in the past (i.e., dependence on paperwork and affixing approval seals), due to the nature of their operations. Furthermore, regional banks basically provide such services without compensation. While on the subject of fees this paper will outline the current situation and identify some issues, on the subject of one more means of improving the efficiency of administration. It will consider how the efficiency of administration of garnishing of deposits and deposit investigations can be improved.

The possibility of electronically garnishing monetary claims (e-garnishment) has been considered in the past, and several years ago, the American state of North Carolina introduced an e-garnishment system for deposits. As an effort to apply the same approach in Japan, Higo Bank began centralized garnishment through exchange with local governments in digital form. While this cannot be described as a case of full computerization, it is very close. Accordingly, this paper will, based on a review of the current state of deposit garnishment and last year's report on regulatory reforms, examine the case of Higo Bank and Kumamoto Prefecture and consider future prospects. It also will ascertain the current state of and discuss future prospects for deposit investigation as well.

Computerization of Garnishment of Deposits (e-Garnishment) and Deposit InvestigationPDF:751KB

(This article was translated from the Japanese transcript of Dr. Kashiwagi's column.)