The administrative system of Japan has a three-tiered structure: the top tier is the national government, and below that are the two tiers of local governments? .Prefectures and municipalities.
With the exception of administrative functions such as foreign relations and national defense, most of the administrative functions are financed both by the national government and local governments. Many of the national policies and programs are carried out by local governments.
In fiscal 2011, net total expenditure by the national government and local governments amounted to 68.5164 trillion yen and 96.2329 trillion yen, respectively. The scale of expenditure by local governments reached approximately 1.4 times that of the national government; this figure shows how extensive a role local governments play in the public administration of Japan.
The total amount of tax collected in fiscal 2011 was 79.3468 trillion yen, of which national taxes accounted for 56.9% and local taxes, 43.1%. However, the ultimate allocation of this revenue was 30.1% to the national government and 69.9% to the local governments. This is because about 50% of the taxes collected as national tax are distributed to local governments through systems such as the local allocation taxes, local transfer taxes, and special grants to local governments.