[Local Government Management Practice Report] How to Prevent the 'Outflow of Public Funds' Proceeding Behind the Introduction of the Accommodation Tax.
Global Investment Organization LLC has released a practical guideline recommending 'unbundling' in the management of local government accommodation taxes. The goal is to review comprehensive outsourcing to major companies and maximize economic benefits for the regional economy.
📋 Article Processing Timeline
- 📰 Published: April 24, 2026 at 18:00
- 🔍 Collected: April 24, 2026 at 09:31
- 🤖 AI Analyzed: April 24, 2026 at 10:03 (31 min after Collected)
Global Investment Organization LLC (Location: Chuo-ku, Tokyo; hereinafter 'our organization'), which supports the redesign of administrative practices for local governments, has formulated the 'Survey and Design Guideline for the Return of Public Funds.' This practical guideline aims to suppress capital leakage outside the region accompanying IT investments and business outsourcing, and to maximize the ripple effect on the regional economy in the operation of specific financial resources such as the accommodation tax.
Starting today, we are releasing to relevant local government officials a logic for 'divided ordering' that can withstand audits, as well as a specification drafting guide that can be directly diverted for internal drafting.
Quantitative Analysis of 'Structural Leakage' in Accommodation Tax Operations
Upon introducing the accommodation tax, a 'structural economic leakage' has become an issue, where collected tax revenues are allocated to payments to major businesses and consulting firms outside the region, rather than being returned to local businesses. According to our organization's analysis, if the existing comprehensive outsourcing model is continued, it is estimated that approximately 40% of public funds will flow out of the region without passing through the local economy. From the perspective of optimizing public expenditure, this result prompts a practical reconsideration against the principle of 'achieving maximum effects with minimum expense' stipulated in Article 2, Paragraph 14 of the Local Autonomy Act.
The 'Dilemma of Specification Drafting' Faced by Local Government Officials
When operating new financial resources like the accommodation tax, many local governments rely on 'following precedent' and comprehensively outsource to major vendors. However, this not only hinders the entry of local companies and limits the ripple effect on the regional economy but also entails the risk of future cost inflation due to 'dependence on specific companies.' In this guideline, we have systematized the logic of 'divided ordering' that avoids these risks and can withstand audits.
Capital Return Model for Accommodation Tax Operations
The Structural Loss to the Regional Economy Caused by the Existing 'Comprehensive Outsourcing Model'
In the execution of accommodation taxes and tourism promotion budgets, many local governments choose 'comprehensive outsourcing (full outsourcing),' where they outsource everything from research to execution to 'major consulting firms' or 'general advertising agencies.' However, our organization's analysis revealed the reality that under such models, the majority of public funds flow out of the region as 'management fees' and 'subcontracting costs,' and orders to local companies, printing companies, and event contractors become extremely limited (stagnation of the return rate). This can be said to be a 'structural loss' across all procurement areas of local governments, not just limited to IT development.
Promoting Unbundling (Divided Ordering) to Regain 'Autonomy' in Administrative Execution
This guideline reviews 'excessive bulk ordering,' which invites monopolies by major companies, and presents the 'unbundling' method for local governments to take the initiative and order directly from local companies. Direct ordering, which has been avoided for reasons such as 'lack of expertise in drafting specifications' or 'increased administrative burden,' is now packaged from the creation of draft specifications ensuring audit rationality to evaluating the fulfillment capability of local companies. We complement the practical work for division managers to fulfill their original responsibility of 'regional contribution.'
Model Simulation of Economic Ripple Effects (Case of 500 Million Yen in Accommodation Tax Revenue)
If orders are placed with major external companies using the existing 'comprehensive outsourcing model,' the final economic ripple effect within the region remains at approximately 120 million yen. However, if 'unbundling' defined by this guideline is applied and orders are placed directly with companies within the city, the reinvestment and consumption effects (multiplier effect) within the region are maximized, and it is estimated that the final regional economic ripple effect will expand to approximately 380 million yen (316% compared to comprehensive outsourcing).
The Necessity of 'Neutral Specification Design' Compliant with the Local Autonomy Act
This guideline explains from a jurisprudential perspective the 'unbundling' method that avoids dependence on specific businesses and allows local SMEs and service providers to enter. In particular, in the application of Article 167-2, Paragraph 1, Item 2 of the Order for Enforcement of the Local Autonomy Act (discretionary contracts), it presents the logic for drafting special specifications to incorporate 'return to the regional economy' as an evaluation item while ensuring audit rationality. It supports resolving the practical proposition of balancing the assurance of fairness and regional contribution faced by division managers.
Comparison of Economic Effects of Unbundling
'Expert Practical Support Scheme' to Complement Decision-Making in Administrative Affairs
Our organization goes beyond presenting theories to deploy practical support aimed at expediting internal drafting procedures within the administration.
- Calculation of the 'regional return rate' using input-output tables and quantitative integration of economic ripple effects.
- Support for constructing jurisprudential logic regarding the 'validity of contracts' assuming audit and council responses.
- Creation of special specification drafts based on the 'regional circulation model' that eliminates barriers to entry for regional companies.
'How Will Local Governments Confront the 6.85 Trillion Yen 'Digital Deficit' in 2026?'
Japan faces a structural issue with an annual digital deficit reaching approximately 6.85 trillion yen, 97% of which flows out of the region. Against this backdrop, introductions of the accommodation tax starting this April...
Starting today, we are releasing to relevant local government officials a logic for 'divided ordering' that can withstand audits, as well as a specification drafting guide that can be directly diverted for internal drafting.
Quantitative Analysis of 'Structural Leakage' in Accommodation Tax Operations
Upon introducing the accommodation tax, a 'structural economic leakage' has become an issue, where collected tax revenues are allocated to payments to major businesses and consulting firms outside the region, rather than being returned to local businesses. According to our organization's analysis, if the existing comprehensive outsourcing model is continued, it is estimated that approximately 40% of public funds will flow out of the region without passing through the local economy. From the perspective of optimizing public expenditure, this result prompts a practical reconsideration against the principle of 'achieving maximum effects with minimum expense' stipulated in Article 2, Paragraph 14 of the Local Autonomy Act.
The 'Dilemma of Specification Drafting' Faced by Local Government Officials
When operating new financial resources like the accommodation tax, many local governments rely on 'following precedent' and comprehensively outsource to major vendors. However, this not only hinders the entry of local companies and limits the ripple effect on the regional economy but also entails the risk of future cost inflation due to 'dependence on specific companies.' In this guideline, we have systematized the logic of 'divided ordering' that avoids these risks and can withstand audits.
Capital Return Model for Accommodation Tax Operations
The Structural Loss to the Regional Economy Caused by the Existing 'Comprehensive Outsourcing Model'
In the execution of accommodation taxes and tourism promotion budgets, many local governments choose 'comprehensive outsourcing (full outsourcing),' where they outsource everything from research to execution to 'major consulting firms' or 'general advertising agencies.' However, our organization's analysis revealed the reality that under such models, the majority of public funds flow out of the region as 'management fees' and 'subcontracting costs,' and orders to local companies, printing companies, and event contractors become extremely limited (stagnation of the return rate). This can be said to be a 'structural loss' across all procurement areas of local governments, not just limited to IT development.
Promoting Unbundling (Divided Ordering) to Regain 'Autonomy' in Administrative Execution
This guideline reviews 'excessive bulk ordering,' which invites monopolies by major companies, and presents the 'unbundling' method for local governments to take the initiative and order directly from local companies. Direct ordering, which has been avoided for reasons such as 'lack of expertise in drafting specifications' or 'increased administrative burden,' is now packaged from the creation of draft specifications ensuring audit rationality to evaluating the fulfillment capability of local companies. We complement the practical work for division managers to fulfill their original responsibility of 'regional contribution.'
Model Simulation of Economic Ripple Effects (Case of 500 Million Yen in Accommodation Tax Revenue)
If orders are placed with major external companies using the existing 'comprehensive outsourcing model,' the final economic ripple effect within the region remains at approximately 120 million yen. However, if 'unbundling' defined by this guideline is applied and orders are placed directly with companies within the city, the reinvestment and consumption effects (multiplier effect) within the region are maximized, and it is estimated that the final regional economic ripple effect will expand to approximately 380 million yen (316% compared to comprehensive outsourcing).
The Necessity of 'Neutral Specification Design' Compliant with the Local Autonomy Act
This guideline explains from a jurisprudential perspective the 'unbundling' method that avoids dependence on specific businesses and allows local SMEs and service providers to enter. In particular, in the application of Article 167-2, Paragraph 1, Item 2 of the Order for Enforcement of the Local Autonomy Act (discretionary contracts), it presents the logic for drafting special specifications to incorporate 'return to the regional economy' as an evaluation item while ensuring audit rationality. It supports resolving the practical proposition of balancing the assurance of fairness and regional contribution faced by division managers.
Comparison of Economic Effects of Unbundling
'Expert Practical Support Scheme' to Complement Decision-Making in Administrative Affairs
Our organization goes beyond presenting theories to deploy practical support aimed at expediting internal drafting procedures within the administration.
- Calculation of the 'regional return rate' using input-output tables and quantitative integration of economic ripple effects.
- Support for constructing jurisprudential logic regarding the 'validity of contracts' assuming audit and council responses.
- Creation of special specification drafts based on the 'regional circulation model' that eliminates barriers to entry for regional companies.
'How Will Local Governments Confront the 6.85 Trillion Yen 'Digital Deficit' in 2026?'
Japan faces a structural issue with an annual digital deficit reaching approximately 6.85 trillion yen, 97% of which flows out of the region. Against this backdrop, introductions of the accommodation tax starting this April...