Appeal Case to Revoke the Determination of Special Local Allocation Tax (Reiwa 7 (Gyo-Ko) No. 22)

In 2025, the Fukuoka High Court's Naha Branch heard an appeal by Yonabaru Town, Okinawa Prefecture, against the State of Japan. The town sought to revoke the Minister for Internal Affairs and Communications' decision on the special local allocation tax amount for fiscal year 2020. The plaintiff contended that the calculation method was arbitrary, lacked transparency, and violated the constitutional guarantee of local fiscal autonomy under the Local Autonomy Act. The case followed a lower court ruling that had dismissed the claim, asserting that the central government's fiscal discretion was lawful. The high court examined whether such administrative decisions on intergovernmental transfers were subject to judicial review and whether the town's financial autonomy had been infringed. Ultimately, the court upheld the original decision, finding that the government had not exceeded its scope of discretion and that no illegality was present. The ruling underscored the challenges local bodies face in contesting national fiscal allocations.

The Fukuoka High Court dismissed the appeal, upholding the lower court's judgment that the central government's decision fell within the bounds of its administrative discretion and was not illegal.

Whether the calculation method of the special local allocation tax by the Minister for Internal Affairs and Communications is subject to judicial review, and whether the specific determination for Yonabaru Town violated the principles of local fiscal autonomy guaranteed by the Constitution of Japan and the Local Autonomy Act.

The ruling reaffirmed the wide discretionary power of the central government in allocating special local allocation taxes, making it difficult for municipalities to succeed in legal challenges. It sparked renewed debate among local government associations and constitutional scholars about the need to reform the local allocation tax system to ensure fairer and more transparent distribution, especially for financially vulnerable regions.