Kyoto's Bankruptcy: The Crisis of Japan's Top Tourist Place
842 billion yeah this is a total amount of substantial debt balance of Kyoto City to put this into perspective the construction costs of Tokyo Skytree is 40 billion yen meaning kill the state could find the construction of 21 Sky trees but why is kill the city the world-renowned sightseeing place with many historic temples and shrines now suffering from such a massive debt hi my name is artsu the owner of this channel in this video we will look specifically at the reasons for Kilda studies for learning debt the background to low tax revenues the surprising fact that the tourism is not leading to higher tax revenues and how the city is dealing with this debt problem and its impact finally we will also look at a positive fact that in 2022 the city has achieved a balance of payments for the first time in several years this is the other side of Kyoto that you don't know [Music] foreign [Music] 40 kilometers north of Osaka at the heart of Japan's Mainland horseshoe lies the city of Kyoto surrounded in awful directions by mountains and linked to the lake viewer through the South Kyoto's geopolitical prowess is undeniable one of the most momentous eras in kilda's Rich tapestry of History Commerce in 794 when it was christened as hey Uncle succeeding Nala which was known as HEI shoko as Japan's imperial capital this Monumental shift wasn't very a capricious decision it was influenced by intricate issues tied to Asia kills geographical and political challenges and his intricate relationship with Buddhism heian kills Urban blueprint was inspired by Chinese Capital designs comprising a grid-like layout dotted with grandiose Mansions of nobles from the establishment of hey Uncle onus Kyoto Flawless as the Nexus of Japanese culture arts and Academia through this Evolution iconic temples and shrines such as fusimi naritaisha yasaka Shrine Kyo mystera and king of his Temple were elected each telling its own story echoing the city's illustrious past as time went by in 1868 the major restoration marks Japan's Swift modernization for over a millennium kilter had been imperial capital but Emperors shifted to Tokyo symbolizing an end to kilda's political centrality however rather than diminishing Kyoto's significance transformed from the late 19th through early 20th century as Japan underwent western style industrialization Kyoto began redefining itself particularly in silk weathering a primary Japanese export Kyoto modernized as industry by sending experts to France and adopting Technologies like Jacquard weathering notable research florists in institutions like Kyoto University established in 1897. Kyoto expertly balanced modern industrial growth with the preservation of its historical and cultural landmark during World War II Kyoto's Rich culture and historical aspects played a role in sparing it from atomic bombs that devastated Hiroshima and Nagasaki initially the city was one of the bombing targets and allegedly the bomb was planned to be dropped at the center of a locomotor roundhouse to annalia to Railroad facilities and the city itself however U.S Secretary of War Henry L Simpson recognized skoda's cultural significance and advocated its exclusion but this is a person who also promoted the internment of Japanese Americans anyway while regular bombings damaged coton it wasn't completely destroyed preserving many traditional wooden houses still visible today post-war as Japan underwent rapid economic growth Kyoto was no exception it thrived as Japan's Center for traditional culture cultural and religious festivals once halted resumed and continued to Captivate its money modern Kyoto showcases a coexistence of the old and new it boasts 7 world heritage sites underlying its enduring cultural significance every year millions of tourists both domestic and international visit Kyoto to immerse themselves in its Rich history and revered shrines and samples so why is this world renowned historical City now financially suffering as I said earlier Kyoto city has a huge debt of 842 billion yen so what's the cause it's essential to analyze the primary physical burden of the city and a low tax revenue from both citizens and tourists the first main reason for the city's huge debt is the ballooning cause of the Kyoto Municipal Subway initially the budget was underestimated and eventually swelled from 953.7 billion yen practice contributing to this included a cost of archaeological surveys mandated by the cultural properties Protection Law which could not have been foreseen at the project conception adding to the complexity is aforementioned kilda's Rich history that dates back to the year 794 with numerous archaeological sites still buried underground any new construction requires expensive subsurface service sometimes leading to delays of up to 4 months before construction even starts if a historical structure is on Earth construction can hold for use as demonstrated in Tokyo where the discovery of a 150 year old Railway struction stopped work on Takanawa Gateway station temporarily Kyoto Subway was no exception because the archaeological survey took a lot of time and money it led to the blooming cause of the whole construction Additionally the inflation during Japan's economic bubble period in the 1980s led to the swelling costs of construction another sombring block was a short for in ridership initially daily leadership for the East-West and the colors malaise was projected at 389 000 passengers however the actual number of Platters at around 300 000 resulting in Fair revenues that fell short of expectations although day-to-day operational costs were covered by the fair income the high cost of depreciation for the construction expenses resulted in persistent deficits over time these operating losses led to ballooning cumulative Financial shortfall faced with chronic deficit the Kyoto Municipal Subway was Lee classified as a financially troubled entity and though various measures were taken to improve management improvements were short-lived to address the mounting losses the city utilized a special Financial reconstructing bond amounting to 120 billion yen unlike typical bonds these have no financial support from the national government about maturity putting the owners entirely on Kyoto City for repayments adding insult to injury the carbon 19 pandemic led to a sharp decline in radish exacerbating the already precocious financial situation and causing the subway system to once again be classified as a financially troubled entity another huge reason for the city's huge debt is the renovation of Kyoto City Hall in September 2021. it serves as a telling example of the pitfalls of Municipal projects where quote unquote good intentions can delve into Financial burdens initially budgeted at 13.8 billion yen the process
costs skyrocketed to 15.9 billion yen due to impart the rising material costs notably this inflated figure includes 1.3 billion yam spent on a seemingly superferous underground passage connecting the nearest underground shopping mall to the City Hall a project component criticized as an unnecessary expenditure by residents further adding to the city's Financial rules the new city hall features extravagant decor and amenities aimed at promoting Kyoto's traditional culture these include lacquered elevators and tea rooms elements deemed under necessary and costly while celebrating cultural heritage is commendable the question arises should this come at the cost of pushing a city already in severe debt lastly poor planning exacerbated these budget issues when plans were first made in 2014 City Hall employed about 2 000 people with another 1 000 in surrounding buildings the intention was to consultate these workers in the new city hall but an organizational shake-up in 2015 added up on unexpected 1 000 employees to the tally the result zones needed for additional capacity inflated Construction and Equipment costs resulting in a total project cost of 10 billion yen over the initial budget all these factors the Southwest construction and the City Hall renovation have combined to tighten the fiscal bias in Kyoto City exacerbating public skepticism about a prudent use of taxpayer money given these circumstances it is unsurprising that citizens question without a whole lavish spending on the city hall renovation was truly adjustment [Music] another reason for Kyoto's financial difficulties is the city's tax revenue which is lower than the average of major Japanese cities on a per citizen basis Kyoto collects less Municipal tax compared to neighboring Osaka and other cities we now analyze the primary revenue sources the resident tax based on the income of killed citizens and the property tax applied to the land and buildings let's take a look at the resident tax first in Kyoto City only 41.6 percent of its residents paid
Municipal tax there are several factors contributing to this surprisingly raw percentage firstly Kyoto lacks a significant business district resulting in a fewer business professionals resulting in the city moreover Kyoto a half of Education with 38 universities and junior colleges houses about 145 000 students which equals to 10 percent of the City's population most of these students live within the city but being students they are resent from the municipal tax furthermore the city has a notably High number of elderly lessons and those on welfare this unique demographic blend with a mix of students and an aging population has a pronounced effect on the city's tax Dynamics next is a municipal tax in many Western countries like the US and the UK certain old buildings gain value over time due to their historical significance however destroyesion in Japan particularly in Koto is quite different in this city the assessed value of all structures especially wooden houses tends to be low apart from historically important buildings of course there are several reasons for this including the building's low resilience to earthquakes and lower construction costs compared to reinforced concrete structures Kyoto sends out naturally in this regard with 45 percent of its buildings being wooden houses and 13 percent of those were built before 1963. this percentage is a lot higher than any other Japanese City indicating that so many wooden houses still exist in Kyoto these low-valued wooden structures are often left abandoned impeding the construction of new housing for younger Generations within the city as of 2023 no property taxes have been collected from this over 100 000 vacant houses basically referred to as Ikea the city plaza introduced a vacant house tax by 2026 to address this issue however the estimated annual revenue from this new tax is around 950 million yen which is considered low in the grand scheme of things meanwhile constructing new buildings in the city is also a challenge in Kyoto the cultural and historical significance of the cityscape has led to strict regulations on new constructions since 2007 the new landscape policy has imposed heart restrictions of approximately 20 meters for most buildings and even as low as 10 murders in certain preservation districts this has made it challenge for the city to attack Investments for high-rise Apartments commercial buildings or factories the policy also restricts the installation of neon Billboards making Bland promotion less feasible but on the bright side because of this policy several notable franchise buildings including 7-Eleven and Starbucks modified their design authentically to match the theme of the classic atmosphere of the Town another issue is the archaeological survey which I already mentioned in the second chapter just like a construction of the subway system the new buildings have to follow the cultural properties Protection Law and the process takes a lot of time and money before the launch of construction in response Kyoto City officially announced a plan to relax the height restriction to 31 meters in areas around the southwestern and Southern parts of Kilda station starting in 2023 however this move has been met with opposition from those who want to preserve Kyoto's Traditional landscape the Dual conundrum of lower Municipal tax collections due to its specific demographic plan and syringent construction regulations title is cultural heritage puts the city in a very difficult position while the measures like the proposed vacant house tax and relaxation of heart restrictions represent proactive steps towards addressing these issues they aren't complete Solutions moving forward the city will have to engage in keeping a delicate balance of modernity and tradition while ensuring that it remains financially solvent foreign City derives significant tax revenues from tourism but in reality tourism accounts for only 10 percent of the city's industry certainly an increase in tourism can increase revenues for hotel and restaurant operators in Kyoto City however the inhabitants tax and other taxes derived from this increased Revenue actually do not account for significant proportion of the city's overall tax revenue now we analyze the complexities of the tourism industry in Kyoto City thank you first and foremost Kyoto is home to numerous temples and shrines that attract great number of tourists every year however as I mentioned the city struggles with significant debt and would ideally like to generate tax revenue from these popular religious sites the issue is that these temples and shrines operate as religious organizations making the admission fees non-taxable under Japanese law an interesting present was the ancient Capital preservation tax levied between 1985 and 1988. it was applied to 40 prominent temples and shrines and charged business an additional 50 Yen per adult however this tax caused considerable Discord between the city and the religious institutions some leading temples like kyomizedela close their gas in protests seriously impacting local tourism businesses and even jeopardizing the annual summer event guzan or kuribi closely tied to kill the Buddhist Traditions the tax was abolished after just three years due to widespread opposition and litigation the whole incident known as the ancient Capital Tax controversy highlighted the temples and shrines of resistance to taxation partially because they there have to cause for the maintenance and repair of their ancient wooden structures and valuable cultural properties another noteworthy issue killed a slow tax revenue in terms of the sightseeing industry is a high percentage of non-regular employees in the whole of Japan 54 of the workforce for the sightseeing industry is made up of non-legular employees compared to 23 percent in manufacturing Kyoto city of course is no exception to this threat one of the main factors contributing to this is seasonality spring especially the cherry blossom season and Autumn marked by the vibrant for foliage are picked tourist seasons in koten during these times an influx of tourists insists hiring of temporary staffing hotels restaurants and tourist shops conversely the off-season's summer due to trim heat and winter absent of specific events see a reduction in tourist numbers leaving non-regular workers at risk of unemployment this situation has several Ripple effects lower wages for non-regular workers May reduce income tax revenue and increase in social welfare expenses as these workers are more likely to face economic hardship these transpose challenges not just for the workers but also for long-term business strategies impacting skill retention and overall economic stability in the region overall while careless temples and shrines are a magnet for tourism their non-taxable Sailors poses challenges for City in need of financial resources in addition the seasonality of the tourism in Kyoto contributes significantly to the high rate of non-regular employment bringing with a host of Social and economic challenges that require strategic solutions for sustainable future so we also watch cities suffering from massive debt and gaining little tax revenue now we are going to take a look at one example of how kill the city handles this issue in 2021 while the city had budgeted revenue of approximately 430 billion yen its expenditure was slated to be 5 higher at 450 billion year this five percent deficit amounting to around 20 billion yen was spelled by breaking into the savings called the government's debts repayment fund this fund is essentially a financial safety net specifically designed to pay by government bonds which are securities to government issues to finance public projects it is a wise practice to break into such a font during crisis as was demonstrated by nagoyo City during the pandemic however Kyoto city has been tapping into respond consistently since 2005. irrespective of the economic climate think of this as a regularly breaking into your emergency savings to pay off day-to-day debts clearly unsustainable and risky Behavior consequently the amount with Throne has added up to an alarming 50.5 billion yen
if this practice continues calculations show the fund will be depleted by 2026. while the firm's purpose is flexible using it for routing costs under Mars's core purpose of acting as a buffer against future Financial uncertainties however to make matters worse I miss an increasing restrained financial situation the city of Kyoto has seen a reduction in its child rearing support including an effective increase in child care fees and a closure of several Municipal daycare centers as a result the number of newborns in the city has dipped below 10 000 in 2020 down from over 11 600 a decade earlier adding to the challenge High property prices and a lack of new housing developments May kill a less attractive option for young families this version has led to a notable decline in population particularly among the age group of 25 to 44 considered critical for sustaining Community growth the consequences of this ongoing population decline could be severe for Koto economically a shrinking population could result in a reduced investment in local businesses and Community Development significantly impacting sectors like tourism which the city heavily lies on as a city is celebrated for its Rich history and culture a declining population May erode the community and invents that sustain kilda's unique cultural value on the global stage [Music] although the city of Kyoto is struggling with high debt low-tex revenues and declining the population it is actually beginning to show some signs of improvement in 2022 the city achieved a notable fiscal Milestone by balancing its budget for the first time in 22 years as announced by Maya kavokawa with an increase in tax revenue and effective control of expenditures the city's General counting income for the fiscal year 2022 stood at 962.1 billion yen after subtracting expenses of 946.4 billion yen and 7.8 billion Yang
carried over from unused funds from the previous year the city reported a surplus of 7.7 billion yen this accomplishment is especially notable for one key reason the city achieved this without depleting its garments that repayment Fund in the past as I mentioned this fund served as a temporary solution during financially touched periods but Kyoto has now laid out a sustainable fiscal path without lying on it mayor kadukawa who managed to balance the budget in just two years a task initially projected to take a decade conformed Roses by declaring quote rests are short Kyoto City will never face fiscal collapse on the income side the city set a new record of 311.9 billion yen an increase of 11 billion yen from prior year this growth was fueled by Rice's in property and individual Municipal Taxes as well as local allocation tax on the expenditure side savings were made from measures like reducing the number of civil servants and extending the retirement age which led to lower retirement allowances however the city faces a challenge of replenishing the previously utilized 50.5 billion yen from the government debt repayment fund by fiscal year 2038 and along its long-term commitment to financial severity in summary while Kilda city has faced significant fiscal challenges in the past its research tumors signal a promising shift towards sustainable financial management the efforts to balance its budget without tapping into crucial reserves showcases a city's commitment to ensure long-term physical health however the path forward will require continued Solutions and Innovation especially in the face of demographic challenges to secure the city's vibrant future and Cultural Literacy and those are the major reasons Kyoto city is now financially that heavily and how the city took a firm step in 2022 to solve the issue I'd like to conclude this video by mentioning my personal opinion what is long history and cultural significance Kyoto faces a substantial debt problem stemming from diverse factors such as the enormous construction costs for the city facilities no less than taxes and limited tourism tax revenue amidst these challenges achieving a balanced budget in 2022 can be described as a significant step towards improving the city's economic crisis of course even with his shift towards a surplus Kyoto still holds a considerable debt however this achievement can serve as a valuable case study for other regions and countries especially as numerous tourist cities worldwide might confront similar issues in the future coder is expected to pave A New Path as a representative ancient capital of Japan all while maintaining a balance between its profound tradition and Innovations [Music]
2023-10-01 08:43
