Appended Note 3-7 Classification of National Financial Subsidies as Seen from Time of Establishment and National Share of Contributions

1. Classification of subsidies

Based on "FY 2000 National Financial Subsidy Survey" by the Fiscal Research Institute, subsidies, contributions, allocations, bounties and commissions in the general and special accounts are put in order according to the following items:

• - Accounting items (subsidies, contributions, allocations, bounties and commissions)
• - Relevant government agencies
• - Code numbers
• - Outlays in the previous fiscal year
• - Outlays in FY 2000
• - Local government contributions (prefectural, municipal and other contributions)
• - Allocation targets
• - Fiscal years for earmarking
• - Legal or budget subsidies
• - National shares of contributions (= national subsidies / total expenses)

2. Outline of classification results

Following is the classification of national financial subsidies in the general and special accounts by the time of establishment and the national share of contributions:

3. Specification of border between national financial subsidies and contributions

As for the national financial subsidies and contributions, the Promotion Plan of Decentralization (as decided on at a cabinet meeting in May 1998) said, "If the national government can contribute or subsidize all or part of expenses for projects of local governments, the border between national financial contributions and subsidies should be specified." It then called for the positive consolidation and nationalization of each category.

Later, the government separated national financial contributions from national financial subsidies and reported the separation to the Committee for Promotion of Decentralization. Some of those left for further coordination were considered at the committee, which submitted the "View of the Committee for Promotion of Decentralization" (August 2000) to specify the border between national financial contributions and subsidies.

4. Outline of policy for consolidation and rationalization of national financial contributions and subsidies Of the national treasury disbursement (¥27,711.4 billion) in 2 above, commissions as "national government payments to others commissioned to undertake national projects," and subsidies to "those other than local governments" can be considered out of those subject to reduction and are exempted. The remainder has been classified into "current national financial contributions," "national financial contributions for construction projects" and "national financial subsidies" in accordance with the "View of the Committee for Promotion of Decentralization" as follows:

5. Classification of subsidies as seen from time of establishment and national share of contributions

Table 3-4-6

classifies ¥4,021.5 billion as categorized as "national financial subsidies" in 4 by the time of establishment and the national share of contributions.