Kyoto, Japan’s beautiful old imperial capital, is quickly going bankrupt


Temple view
A file photo shows the Kiyomizudera Temple in Kyoto, Japan.

John Banagan Photography/Getty

Tokyo — Kyoto’s glorious ancient monuments, Zen temples, and soaring pagodas have made it a major tourist magnet for a century. The Japanese city has only about 1.5 million inhabitants, but has 17 individual UNESCO World Heritage sites. But Kyoto’s treasure trove of priceless artifacts belies a painful reality: Japan’s magnificent imperial capital is empty.

Kyoto Mayor Daisaku Kadokawa didn’t mince words at a shocking press conference last year: “We are facing a crisis situation with the prospect of bankruptcy within a decade.”

Without drastic cuts in public services, the city is projected to be in debt to the tune of $2 billion in just five years, and all reserves will be gone.

Japan’s ongoing ban on tourists amid the coronavirus pandemic hit Kyoto particularly hard. In 2019 alone, the city attracted a whopping 88 million visitors, but tourism has since dwindled to a trickle of mostly local visitors. Japan’s total inbound tourism plummeted to about 250,000 people last year, the lowest since records began in 1964.

Tourism in Japan during the Golden Week holiday
An approach to Kiyomizu Temple is crowded with local tourists during the Golden Week holiday in Kyoto, Japan, on May 3, 2022. Japan’s hospitality industry has pushed the government to reopen to more overseas visitors.


But pandemic-related spending and the collapse of tourism have merely exposed decades of fiscal mismanagement in the city. The red ink began flowing 30 years ago when Kyoto built a second subway line at a cost that eventually totaled $4 billion. The Tozai Line never managed to meet its daily passenger targets.

Officials also invested $120 million in a lavish modernization and renovation of City Hall, complete with stained glass windows, European-style damask-covered walls, a Japanese teahouse, a rooftop garden, and even an underground corridor connecting it to the white elephant subway . Local residents disparagingly note that the corridor is hardly used.

So last fall, the ax finally fell. The city government has slashed transit subsidies for seniors, increased childcare fees and slashed civil servants’ salaries — despite fears the austerity measures would hasten an already alarming exodus of residents from Kyoto.

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City Hall received 9,000 comments on the budget cuts, with widespread opposition to the belt buckle, according to a report by the Asahi Broadcasting Network last fall. Some residents have called on the city to cut the salaries of city council members — or the number of politicians, period.

Even the city’s zoo has been reduced to soliciting alms. Food manufacturers and nurseries are donating everything from radishes, frozen melons and cucumbers to prunings. All of this has helped the zoo reduce its food budget by about 10%, its vice director Seitaro Wada told local Kansai TV last fall.

Japan is now moving very tentatively to reopen its borders. A few dozen tourists are to be admitted as a test in the coming weeks. But the ancient imperial capital’s budget woes are so ingrained that Hiroyuki Mori, an expert on local public finance at Ritsumeikan University, told YTV News that “even an increase in tourists wouldn’t offset the red ink.”

Alleyway overlooking Yasaka Tower, Higashiyama-ku, Kyoto, Japan
A file photo shows a view of a street in Higashiyama-ku in the city of Kyoto, Japan.


“The core of municipal revenue is municipal and property taxes,” he said, noting that Kyoto lags behind on both counts. Partly due to the numerous universities and 150,000 students, only 43% of residents pay local taxes.

To preserve Kyoto’s unique traditional landscape, high-rise office buildings and condominiums – typically a lucrative source of property taxes in Japan – are banned.

The city is also covered with a remarkable 2,000 Buddhist temples and Shinto shrines, all of which have militantly repelled any attempt to even change their tax-exempt status.

Without divine intervention, the first round of austerity may not be enough to save Kyoto from bankruptcy and its finances being taken over by the national government.

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