In Japan economists and politicians are debating whether national and local tax sys-tem should have a new general consumption tax that has nearly the same feature as the Value-Added Tax in Europe. I discuss only local aspect of that tax problem. The government of Japan plans that part of the revenue from new consumption tax should be distributed to local units as a shared tax in proportion to the inhabitant and employee of the firms in each jurisdiction.
My paper comments on the tax reform plan as follows:
(1) The government planned introduction of the new tax to obtain an additional fund that can be used to decrease the share of personal income and corporation taxes in both national and local tax systems. The alleged objective of this reform is improving a variety of economic incentives for wage earners and firms. But general consumption tax of EC type involves the problem of boarder tax adjustments that could not be managed by local governments. Therefore if the tax reform for indirect taxation become effective, all local governments have to loose considerable revenue from their inde-pendent direct taxes. Instead of independent tax, they are given a shared tax made of part of national consumption tax that is perfectly controlled by central government as to tax base and tax rates. This is direct loss in the degree of local autonomy in fiscal aspect which the government has neglected from the beginning of tax reform plan.
(2) As Buchanan stressed in the book written with Brennan (1980), each local govern-ment is an would-be Leviathan. Local autonomy and fiscal competition among local units must be evaluated as an instrument for controlling Leviathan. Japanese plan to introduce a shared consumption tax instead of independent local direct taxes, mainly inhabitant's tax which was designed by Shoup Mission in 1949, is release from the chain of Liviathan.
The central government will raise the rate and broaden the base of general con-sumption tax, because it provides just object to be exhausted for revenue maximization. Then, all local governments will agree and help the central authority to do so. That means tax payers will be exploited for long.

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The purpose of this paper is to clarify how should the merit and demerit goods be treated in the framework of tax policy from the viewpoint of political economy.
According to R. E. Kohn, the categorization of demerit and merit goods has become increasingly vague. And so he assumes a controversial good or service (CGS) that some people choose to consume, but which other people disdain, often on moral grounds, their utility diminished solely by their awareness that such goods or services are being consumed. He constructed a model in which the CGS can be treated as a Samuelson public good. The model assumes four persons, two of whom consume the CGS and whose marginal rate of substitution in consumption between the CGS and the numeraire good are equal, and two persons whose utility is less because of their awareness that the CGS is being consumed and whose marginal rates of substitution are summed rather than equated. The model is then used to illustrate the case in which sumptuary taxation is not efficient and the CGS should be prohibited. This paper criticized the view that if drinking liqueur should be prohibited just like the prohibition law in the U. S. A. illegally distilled spirits would prevail.
This paper also deals with merit goods in that should activities of charitable foundations be taxed or exempt if they engage their own charitable works. It is pointed out also that the political decision should be made not only by the viewpoint of economics of social welfare function, but also the economics of public choice. It follows that an acceptable social decision-process must meet an equal access condition.

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One of the most important features of the Italian fiscal theory is the state model originated by De Viti De Marco a full century ago. In his work Il Carattere Teorico dell' Economia Finanziaria (1888), De Viti classified the state into two distinct types on the basis of the location of the decision-making power: the monopolistic state and the cooperative state. He used these two distinct state concepts to develop the two alternative fiscal theories which, however, have long been largely neglected in the literature.
In 1949, Buchanan published his paper “The Pure Theory of Government Finance: A Suggested Approach, ” which discussed the two state concepts of his own: the individualistic state and the organismic state. The conceptual resemblance of this dichotomy with the Italian counterpart is manifest, although Buchanan appeared yet to be aware of it in paper. However, the subsequent extention of his work reaveals an apparent Italian influence fully embodied in his remarkable contributions to the theory of public finance.
Some researchers suggest that the uniqueness of Buchanan's fiscal theory is in the democratic setting it provided (in Public Finance in a Democratic Process (1967) ), while others consider the hypothesis of the revenue-maximizing government or the so-called Leviathan state and the related theory of fiscal activities to be more important contributions (as in The Power to Tax (1980) ) . However, the former is predicated on the idea of the cooperative state and the latter has many common characteristics with the analysis of the monopolistic state, both proposed by the above mentioned Italian economist, De Viti De Marco. It would thus be safe to say that the forlorn Italian ancestry has revived and found a new life in Buchanan's fiscal theory.

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Is the burden of debt financed public expenditure shifted to future generations, or not? This was the main issue in the so called “public debt burden dispute”, which took place during the period from the second half of 1950's to the first half of 1960's. J. M. Buchanan challanged the Keynesian proposition that the choice of financing methods between tax and debt brings about no difference in resource amount available for the privatesector, and that the burden, therefore, arises at the time of the expenditure and could not be shifted to future generations.
The dispute was furious and produced various suggestions. Some of the participants in the dispute maintained that the shifting of the burden does occur and some others said it doesn't. However, it ended up unsettled without any theoretical consolidation. Reviewing the issue at the present time, it seems possible to give a more consistent and reconcilatory understanding to the main controversial points. The use of the framework of inter-temporal consumption model makes this possible. This framework has now become our common analitical tool but it wasn't at that time.
The essential point is that public debt finance gives rise to the transfer of personal disposable wealth from future generations to present generation. This is also a very important point to understand the imprications of recent criticisms against Keynesian policy raised from the two different directions both, the Public Choice Group, the leader of which is J. M. Buchanan, and the Rational Expectationists, one of representatives of which is R. J. Barro.

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The basic model of the individual in public choice is basically the Homo economicus of classical and neoclassical political economy. The purpose of this paper is to show the legitimacy of the Homo economicus postulate about human motivation in the political process. The most important reason for justifing the Homo economicus, we think, is in that Buchanan takes the position of individualism, and thinks that the central subject in public choice is to investigate and evaluate the alternative sets of rules and institutions. And the fundamental presumption of his comparative institutional analysis is the ubiquity of conflict among interacting agents. From this the skepticism toward the possession of power is led. Starting from this skepticism and evaluating market and political institutions for their capacity to produce goods and servises that citizens want, it is rational to design institutions assuming a model of political agents' behavior that generates worse outcomes that the empirical record would suggest. Thus the defense of the Homo economicus by public choice theorists as Buchanan is basically methodological and analytical rather than empirical.

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In his book The Limits of Liberty, Professor Buchanan argued that the state has two roles, that is, “protective” and “productive” ones, which are derived from the viewpoint of gains-from-trade among individuals. The purpose of this paper is to elucidate the characteristics of his view of the state described in this book and his essays.
Professor Buchanan's theory of the state is characterized by (methodological) individualism, contractarianism, constitutionalism, libertarianism, subjectivism and democracy. All these elements are important and closedly linked each other. It should be emphasized, however, that contractarianism and constitutionalism, along with individualism, are specially important elements. And it should be pointed out that his libertarianism substantially means the constitutionalist-contractarian position based on individualism. Indeed, his own peculiar libertarianism distinguishes him from the libertarian anarchists, Hayek, Rawls and others. In this paper, we consider the difference between these modern thinkers and Buchanan in more detail.

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The aim of this essay is investigating of optimum condition of a club size when the club is formed by members having heterogeneous tastes. Heterogeneous means that each person has diversified self interest value system, therefore he tends to behave non cooperative conducts to take more advantage at sacrifice of other members. If this tendency breaks out a critical problem, the member must take attainable measure to suppress it and to recover the stability of the club formation. But it is worth to note that the optimal solution is not unique, and varies with the political or power situations of the club. The political or power situation is changed by the heterogeneous conducts or strategic operations of within groups as we frequently observe in real.
This essay assumes that each heterogeneous person organizes a voluntary club to obtain a mutual benefit which is hardly accessed by individualistic efforts. It also assumes the club is composed by a leader, contributers, and free-riders. The optimum size of the club is decided by majority rule, and each group makes some efforts to obtain additional members in order to be majority.
The conclusion of this model suggests that increasing of the club size is a function as a redundancy or absorbing slackness used to solve several conflicts between opporsing groups. In other words, the expanding of the club size is an effective measure to solve a free rider problem. This is a counter directed conclusion of Olson's group model.

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This paper attempts a comparative analysis of urban and rural voters in the contem-porary Japan. Until recently rural voters were conceived to be traditionalistic and conservative while urban voters were regarded as modernistic and progressive from the standpoint of their political attitude and ideology. However, Japan's economic growth drastically changed this kind of image on urban and rural voters. Rural voters were forced to change their political attitude and orientation because economic growth caused the crises of rural areas. Rural voters have tried to resolve this situation by having recourse to political power. They have been willing to go to politicians and connect with regional organizations which are very active in political process. On the other hand, urban voters have been beneficiaries of economic development and wealth. Ironically, urban voters have become more and more apolitical, non-progressive, and less-ideological with the increase of their income and the rise of living standard. Today, Japan's urban voters cannot be progressive any more.
This paper examines several positive researches on urban and rural voters' political and electoral behavior, and then considers the characteristic aspects of them. For example, some data show that rural voters make much of regional interests and political effectiveness on their decision of voting while urban voters are concerned about national goal and ethics. In addition, the affiliation to politicians' supporting associations in rural areas is higher than in urban areas. The relationship of voters with politicians in rural areas is much closer than in urban areas. In conclusion, this paper discusses that rural voters have a strong orientation of regional activities, group-belongingness and interest orientation while urban voters are regarded as more individualistic, more isolated and less interest-oriented. This difference between urban and rural voters characterizes Japan's political process. Pressure group activities or organizational behavior are more aggressive in rural areas than in urban areas.

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The objective of this paper is to review the welfare foundations on the ordinal utility theory of cost-benefit analysis (CBA) .
In welfare economics, it is proved that the project of which ΣEV (the aggregated equivalent variation over individuals) is positive, improves society (The individual equivalent variation is the ordinal measure of individual utility changes and can be calculated by a Taylor series expansion using the individual Marshallian demand function) . So far there is a general belief that CBA is given the welfare foundations by this proof. This is true if CBA is defined as the method that compares ex-ante situation with only one ex-post situation. However, CBA practically compares and estimates many alternative projects. In section 4, if CBA is defined as the method that compares many situation (if CBA regards the project as the better, the greater benefit minus cost), it can be proved that CBA can not be given the welfare foundations by the proof.
In figure 1 (for simplification we argue two commodity economy), volume of commodity X is in the horisontal axis. Volume of commodity Y (the numeraire goods) is in the vertical axis. Position I is ex-ante situation and position II and position III are comparable alternative situation. CIC is Scitovsky or community indifference curve. ΣEV_A→B stands for the aggregated equivalent variation over individuals from situation A to situation B.
In figure 1 we find following formulas
ΣEV_I→II=T_IU_I (1)
ΣEV_I→III=T_IV_I (2)
ΣEV_II→III=U_IIV_II (3)
ΣEV_III→II=V_IIIU_III (4)
ΣEV_I→II>ΣEV_I→III (5)
One may feel intuitively from above formulas that situation II is the best of three. However, it is clear from figure 1 that the best of three is undoubtedly situation III.
Therefore it is not true to say better a project of which benefit minus cost is greater than that of another project. This is because CICs (that are not ordinal measures of welfare level of community) intersect unlike individual difference curves.

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