Kyoto is facing bankruptcy. What happens now?



Kyoto The city that was once the capital of Kyoto has been a tourist destination, drawing foreign and domestic tourists to its World Heritage-listed temples, shrines, and rock gardens is now facing bankruptcy. You may try for free for more information. From Kyoto’s old-fashioned geiko (geisha) area in Gion to Kinkakuji and which is the Golden Pavilion, Kyoto’s has many cities that rival those in the world for the cultural treasures.

For a long time, Kyoto, home of the Emperor, was a closed city that was not accessible to anyone outside. Foreigners traveling through Japan from the 17th to the 19th century weren’t allowed to set into the city. Even as late as the 1800s Westerners from Japan’s treaty ports like Yokohama as well as Kobe were not allowed to visit the city unless they obtained an express permission which was not often granted. One report, which appeared in a history from 1918 about the opening Kobe Port, suggested that Kobe Port, suggested that up to an international exhibition was held in Kyoto there were only twelve Westerners had ever visited it.

The 19th century was a time when the notion that Kyoto might one day be one of the most visited tourist destinations due to its an extremely developed infrastructure catering to foreign tourists would likely was dismissed as mere fanciful notion. However, by 2014 international media like Travel +Leisure magazine were calling Kyoto as the best city to visit (an honour Kyoto won another year later).

The recognition led to visitors from all over the world pouring into Kyoto and putting pressure over the town’s facilities. New hotels popped like mushrooms and new companies catering to the rapidly growing tourism industry appeared in a matter of minutes. The Mayor in kimono Daisaku Kadokawa played the role as a cultural ambassador, popping on international forums to praise Kyoto’s history and culture, and urging people to come visit.

But the good times were accompanied by a dark truth. While Kyoto’s tourism industry was raking in records of profits, the city itself was in financial crisis.

A total of 3.8 million visitors visited Kyoto in the year 2019 according to the city’s Tourism Office of its municipality. | GETTY images

On June 1, the local tourism office reported that only 450,000 foreign tourists would visit in 2020, which is a drop of 88% when compared to 3.8 million that visited in the year. Reservations for hotels for 2020 dropped almost 60 per cent in the year 2020 when compared to the year prior.

In August, a stern Kadokawa declared that Kyoto was in danger of going bankrupt and that drastic cuts to the city’s budget would be required in the coming four years to avoid. The plan to reform the city for 2021-25 proposes to reduce the bureaucracy by at least 550 individuals as well as raising the minimum age for those who can avail discounted transportation by 70 years to and cutting the subsidies available to daycare workers. Kyoto has debts totaling 860 billion Y and is facing an Y=280 billion deficit in 2025.

“We’re facing a crisis and could be facing bankruptcy within the next decade,” Kadokawa said in the middle of August, when he laid out the plan.

The city outlined its motives to focus on these areas specifically. First, the subway system is not performing well. lines currently are Y=5.4 billion in delinquency. In addition, the free or discounted bus and rail passes given to people over 70 would have been taken care of decades ago. However, as the amount of older citizens who are eligible is increasing the financial burden is becoming too heavy.

In the end, the attempt to make Kyoto into Japan’s leading choice for parents who want good childcare by subsidized day care facilities that are far over the national norm has resulted in the city being short of money, the city claims. Yet, even these explanations fail to address what the city is facing when it comes to imposing municipal taxes on its residents.

The proposed cuts included in the plan for four years are believed to save Y=160b which is enough to keep Kyoto’s financial affairs. However, Kadokawa didn’t address the question regarding whether additional cuts might ultimately be needed.

It’s simple to put the blame for coronavirus outbreak and the tourism slump this year on Kyoto’s budget problems and the sudden necessity to cut costs. But the problem is far more serious.

Reservations for hotels for Kyoto for 2020 dropped almost 60% in the beginning of the year of the year compared to last year’s in accordance with the Kyoto’s tourism office. | KYODO

White Socks Brigade White Socks Brigade

Even though it’s a modern city with a population of 1.5 million inhabitants, Kyoto has its own unique issues that severely restrict the capacity of Kyoto to make up the financial loss by increasing local taxes.

A few of these obstacles arise from legal issues. To preserve Kyoto’s traditional ambience local ordinances restrict the building’s height. As compared to other cities in the region, Kyoto is a bit smaller. Japanese cities Kyoto is home to a few contemporary office or apartment structures that are taxed more as opposed to traditional wooden structures and Machiya or smaller, more modern structures that must be built under the regulations.

Another reason is that of demographics. A little more than 10% Kyoto’s inhabitants are college students , while around 28% are older than 65. They typically don’t pay any tax or pay less than residents who are who are in their 20s to 50s.

One of the main reason is that none of Kyoto city’s shrines and temples which are legally registered religious organizations are taxed on property. According to Shoei Murayama is a visiting professor at Taisho University and former Kyoto city councilman, said ,any attempt now by the city’s mayor or council to circumvent the exemption for property taxes by using different forms of levies against temples and shrines to increase revenue will open a can of historical issues.

Shoei Murayama is a visiting professor at Taisho University and former councilman Kyoto’s officials need to confront the realities of fiscal responsibility and find new ways to generate revenue for Kyoto’s recovery. | KYODO

“In 1983, without prior discussion on the part of any committee and without any prior discussion, the city council ratified an ordinance that established an ordinance establishing the Kyoto Old Capital Tax. The 71 temples of Kyoto Buddhist Association Kyoto Buddhist Association, claiming that the tax was in violation of the freedom to worship and suing the city in Kyoto District Court, which decided in favour of Kyoto,” Murayama says.

The tax for tourists of Y=50 for adults, and Y=30 for children was applied to the 37 shrines, temples and temples.

The following two years of anger, protests and protests from the members of the association who refused to pay. The major temples which included Kinkakuji and Kiyomizu have announced they will be shutting their doors to visitors.

Outsiders have tried, such as the local leaders of business, legislators and even well-known as a member of the Yakuza, to facilitate between the mayor and his determination to maintain taxes, and temples, which were opposed to it, were unsuccessful.

It resulted in a two-year battle of destruction between the city, who couldn’t collect taxes and the temples who, when they closed the temples, lost revenues. As the war grew more intense however, some temples, fed up with the fight and in desperate need of funds were forced to leave the organization and reopened accepting that they would pay city. The standoff came to an end by a settlement which was mediated by the effort by Kyocera the founder Kazuo Inamori The city was able to eliminate the tax in 1987.

“In the final analysis, the tax resulted an amount of 35 billion dollars, just one-quarter of what the city had originally had predicted,” Murayama says.

What was the result was at the very least two decades of more discontent and conflict in the city and between temples. This isn’t a time anyone in Kyoto would like to think about, Murayama added. In a book he wrote in 2019 about Kyoto tourism, Murayama wrote that the war caused a stigma among Kyoto residents of “Don’t play with”the white-socket brigade” which refers to the white socks used in the hands of Buddhist monks, as well as associates who possessed political power in the background.

Very few tourists have visited the some of the most famous World Heritage sites such as the Kiyomizu temple in Kyoto in the last 18 months because of the current pandemic in the world. | KYODO

Avoiding Bankruptcy

Today, as Kyoto is slipping into the dark abyss of its finances An idea suggested by Murayama that the priests of his temple wouldn’t oppose is being debated by the members of the tiny Kyoto-based political party Kyoto To Murayama’s own party, while he was a member of the Assembly.

“Because of what transpired during the Kyoto Old Capital Tax back in the 1980s, there will be strong opposition to the idea of imposing an equivalent tax for temples in the present,” says Risa Emura an Kyoto city councilor who is the leader of the party. “Rather than a tax that’s legal an e-donation system could be implemented in temples to raise funds.”

Further cuts and an official gesture at the top of government are required, says the former Osaka Governor. Mayor, as well as Nippon Ishin co-founder Toru Hashimoto. When he was appointed Osaka governor back in 2008 the prefecture faced many of the same financial issues Kyoto had, spending money it didn’t on massive salary for civil servants, and investing money in initiatives that were swollen with red ink.

Hashimoto’s strategy consisted of massive cuts to bureaucracy, privatization of certain municipal services, and the revoking of the tax-exempt status for some buildings that are funded by the prefecture, like the Osaka Lawyers’ Organization building. However, Hashimoto also saw drastic reductions in his own compensation and bonuses. The budget cuts for the prefectural government were a struggle and sparked a great deal of frustration and fierce opposition within the bureaucracy of the prefectural, however, he insisted that they needed to be implemented.

“Kyoto should take a look at Osaka’s model on how the city’s prefecture has cut costs. Kadokawa could help to gain people’s support for any reductions for Kyoto public services, by declaring that he will be making drastic reductions to his salary and benefits , then implementing drastic reductions to the bureaucracy which includes salary cuts. He can then tell the public, ‘I’m giving up and we’re cutting the salaries of bureaucrats all over all levels. However, I’m sorry to say that we might have to reduce services for the city and services,'” Hashimoto said during an August-end discussion on Kyoto’s troubles via Yomiuri TV, a local Osaka TV station.

Another method of creating municipal revenue — increasing local corporate taxes isn’t, Emura says, currently being discussed by council members of the city.

Although Kyoto has some world-class companies like Kyocera, Omron and, obviously, Nintendo, it’s not the center of tax-paying companies like Tokyo, Nagoya and Osaka.

The focus of debate within Kyoto or Kansai is on how to revitalize Kyoto’s economy following the coronavirus pandemic goes away. Much of the discussion is focused on promoting sustainable tourism rather than the industrialized, mass tourism that was prevalent from 2013 until 2020. However, given Kyoto’s need for huge amounts of new revenue to avoid financial collapse, it also comes with risks.

The sudden reemergence from the infection could again deter tourists, particularly in the United States, from returning to their destinations, and geopolitical tensions within East Asia could mean sudden decreases in visitors from this region, which brought in a lot of revenue from tourism to Kyoto in the past.

Prior to the outbreak, Kyoto Mayor Daisaku Kadokawa was active in promoting Kyoto’s history and urging people to visit. | KYODO

Sustainable tourism is great, Emura and Murayama say. But it’s not enough . Kyoto as well as Kyoto, and the Kyoto mayor, must think about ways to attract startups and help create employment.

“A important issue is that young people are looking to be employed in Kyoto however they are unable to find a decent job or career path here. Therefore, they’re forced to go elsewhere to find employment,” Emura says. “There are many restrictions for building high office structures in various parts of Kyoto. However, the area surrounding Kyoto Station might be one location that can be developed and draw new investment from commercial investors.”

What companies should the city allocate its ever-dwindling resources on? Murayama believes that, due to the number of universities in Kyoto and, in particular, Kyoto University which is located in Kyoto, businesses in biotech, IT research and various other fields are areas where Kyoto should focus its efforts.

“Kyoto is well-known and is well-respected internationally,” Murayama says. “If the mayor wanted to approach IT businesses in cities like Boston, Seattle or northern California it could spark an interest from companies like Google in setting up an office at Kyoto.”

In 2019, when asked about the negative impacts of excessive tourism, Kadokawa replied, somewhat skeptically to say that Kyoto was not a city that is primarily a tourist attraction meaning it was more of an historical center of culture, but also an urban city that was modern.

In the present, with Kyoto facing financial ruin unless radical and possibly cutbacks that could be controversial in the political arena are made by the mayor and Kyoto residents have to come to face the financial challenges and concerns regarding Kyoto’s future that they have stayed clear of for a long time.

However, nobody can imagine Kyoto to be bankruptcy, and forced to apply for central government approval to do everything it does and to follow its financial restructuring instructions.

Emura and Murayama believe that the required cuts will be achieved, and the required revenue will be located. But, it’s going to require a city’s leadership to confront fiscal realities and open to innovative ways of thinking about and earning revenue to pay for.

So Kyoto the capital city that dates back 1,200 years in which old-fashioned customs and precedents are revered and polite yet seemingly insincere speech is seen as an attribute, now faces the necessity of an urgent open, honest exchange and swift consensus on how to get back to financial stability.

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