This essay argues that tax incentives in Osaka’s last major redevelopment area, Kita-Yard Phase Two, must be directed not to developers but to companies that move in as tenants. Drawing on the 30-trillion-yen JNR debt, the flawed structure of Phase One, international bidding, and Shanghai’s aggressive strategy to attract global finance, the author exposes the hypocrisy of “green forest” rhetoric and ivory-tower elites while insisting that only corporate relocation and tax relief can truly revive Osaka’s economy.

Tax Incentives Ought to Be Given to Incoming Companies.
This Is a Text I Wrote Two Years Ago.
2010-07-19

There is no one who opposes the idea of Osaka City offering tax benefits on the last remaining land that can be used for Osaka’s revival.
If there are people who do oppose it, they are only those who act out of party interests and partisan calculations.
Everyone knows full well that the only thing capable of driving Osaka’s revival is Kita-Yard.

In every major American city struck by structural change, when they sought to regenerate the city and devised new urban plans, they offered tax advantages to the people who newly acquired housing and moved in, and to the companies that came in as new investors.
Likewise, the only thing the municipal authorities can do is to offer tax advantages. That is the one single point.
“Asahi Shimbun” wrote on September 23 that “Osaka City must exercise leadership” with regard to this matter, but this is precisely their pitfall.
In today’s Osaka City Hall there is probably not a single true elite capable of exercising leadership, and there is no need whatsoever for the bureaucracy to exercise leadership in the first place (I will discuss this later).

What the bureaucracy ought to do is to serve the private sector.
Our salaries are not paid out of their salaries; only the reverse is true.

A small article appeared in the Nikkei under the headline, “Kita-Yard Phase Two, Doyukai: ‘Turn It into Green Space.’”
In this matter, I feel as though I am witnessing firsthand how Japan makes mistakes in exactly this way.
Whose land is Kita-Yard? Is it not land that belonged to the JNR Settlement Corporation?

In the division and privatization of JNR, there was no “partial forgiveness of debts” or “suspension of interest payments” such as is often seen in the liquidation of large corporations. At the same time, not only was there no “income from ongoing operations,” but personnel costs for the liquidation work and the failure of asset disposals compounded the problem. Even after disposing of nearly all assets that could be sold, and even after imposing additional debt burdens on the JR companies (especially the three Honshu companies), some 30 trillion yen in long-term debt remained unpaid (indeed, it increased due to interest payments and the like). As a result, on October 22, 1998, the JNR Settlement Corporation was dissolved along with the abolition of the JNR Settlement Corporation Law.
After dissolution, fixed assets and saleable assets such as JR shares were inherited by the Japan Railway Construction Public Corporation. On the other hand, under the “Act on the Disposal of the Debts, etc. of the Japanese National Railways Settlement Corporation,” the debts were incorporated into the national government’s general account and became national debt (to be borne by the people in the form of “taxes”).
— From Wikipedia.

From Heisei 2 (1990) onward, did you not, led by the mass media, constantly talk about “the burden on the people’s tax money”?
Is the JNR issue not a matter of tax money?
Or is it different now?

For Phase Two we should open the doors entirely to all foreign countries, conduct a competitive auction, and sell the land to whichever sovereign wealth fund or world-class corporation offers the highest price, thereby reducing the burden of tax money by even one yen.
To that end, the government offices should promptly relax the floor-area ratio and thereby raise the value of the land, doing what can be done administratively so that it can be sold at as astronomical a price as possible.
That is all that needs to be considered.
In addition, we should limit consortia to at most two companies.
As a basic principle, the condition should be that it is awarded to a single company. (I will explain the reason for this later.)

If a single company is moving several hundred billion yen of its own money, it might start construction as soon as possible, but it could never postpone breaking ground for a year and a half—because it would be chased by enormous interest payments.

The reason Phase One was postponed is that the twelve-company consortium consists of large corporations making substantial profits, so the burden on each individual company is small, and the cost of a year and a half of delay in the form of interest is nothing to them. That is the only reason they can brazenly commit such shameless acts.

Now, to the main point regarding Phase Two: the only entity capable of deriving the best wisdom and the best outcome for this site is a single company that has acquired it for a massive sum of several hundred billion yen.
In order to recoup such an enormous investment, it will have to pursue maximum appeal and maximum drawing power.
The successful bidder will marshal every conceivable idea to come up with the best possible answer.
No one who has invested several hundred billion yen will be foolish enough to turn the area into pachinko parlors or drinking establishments.

Why is it that people fail to recognize that neither the mass media—who for some reason have forgotten that this is their own tax money—nor the business leaders, whose lives have never once been shaken despite more than twenty years of catastrophic decline in Osaka’s economy, are capable of producing the best answer to Phase Two?

You yourselves have long preached deregulation.
That deregulation will be marvelously realized through a competitive bidding process for Phase Two open to foreign countries, in which the highest price wins.

A “green forest”… Have you still not realized that there is no greater form of pious humbug than this?
The mass media bears the greatest responsibility for Japan’s “lost twenty years.”
In front of Osaka City Hall and the courthouse there is Nakanoshima Park, a splendid park that can stand proudly anywhere in Japan.

For more than ten years, many people who had been forced to fall into the lowest strata of society lived there, and although I saw again and again how YMCA and other volunteers served rice gruel and other food to those who lined up under frigid skies, the city did nothing whatsoever in the way of countermeasures.

What do you intend to do by turning Phase Two into a park?
Are you confident that you can remove people who will have no choice but to live there?
Or do you speak from the premise that you have some means of preventing the park from becoming, like Nakanoshima Park, a place where at night couples secretly indulge in their own pleasures?
That area will become an even worse place than Nakanoshima.
Will you lock the gates at five in the evening?
Will you surround it with walls so high that no one can climb over them?

Not a single Osaka citizen (excluding those of you who live in assured comfort) is thinking about greenery.
Osaka Castle Park, Nakanoshima Park, and Utsubo Park are more than enough for urban parks.
All they wish for is that the city regain its vitality, that Osaka’s economy be revived, that at least one more workplace be created, and that their salaries increase even by a single yen. Can you not understand this?

As for the business leaders in Kansai, who are comparable in age to my own classmates, I was deeply disheartened by their desk-bound theories—no, by their detached, “viewing from on high” style opinions from the comfort of their warm and secure positions.
But I can no longer remain silent. This time I am prepared to fight without retreating a single step.

Ever since I was old enough to understand the world, I have always been a devoted reader of Asahi.
Yet I now find myself thinking, “So this is what ‘Asahi Shimbun’ really is.”
That you and Asahi genuinely believe that merely building a park in front of the station will somehow “send a message to the world” leaves me so astonished at your childishness that I am at a loss for words.
To regain my composure and make a constructive suggestion: if anything, it would be far better to showcase Osaka Castle Park to the world—far larger in area and only recently confirmed to host numerous wild birds and other life. And what is more, there stands the magnificent Osaka Castle.

Needless to say, the party that will reap the greatest benefit if Phase Two is turned into a green forest is the current Phase One developer.

Did Tokyo raise such a commotion when it redeveloped the former Shinagawa rail yard?
It simply relaxed the floor-area ratio, increased the value of the land, opened bidding to foreign investors, and selected the highest bidder.
The successful bidder then constructed buildings that matched the scale of its huge capital outlay.
As a result, not only did the capacity of Tokyo, one of the world’s great business cities, increase further, but the number of world-class luxury hotels—one of the most important yardsticks for judging whether a city is truly a major global metropolis—also increased.
In other words, Tokyo’s capacity as an investment destination for foreign capital grew significantly.

The revival of Osaka’s economy—and by extension the Kansai economy—which has suffered a catastrophic decline for over twenty years, requires one thing above all: to bring back to Osaka the headquarters functions of world-class companies that originated in Osaka (in this age of the internet, there is no reason they must be located in Tokyo—after all, in the United States, the headquarters of global giants are scattered throughout the country).
And we must attract world-leading companies in every field to Osaka.
For this, the office towers in Kita-Yard are exactly what is needed.

For cities whose economies have stagnated due to changes in industrial structure, or for states and regional cities that cannot survive without revitalization, there is only one effective measure to take.
That is to provide tax incentives in order to promote corporate investment and relocation.
Every city and region in the world has demonstrated that this is the single most effective means.

Officials at Osaka City Hall replied, “We are already doing that,” but because I knew the content of their measures, I cut them off and said:
“The incentives are not for the developer. They acquired the land at a price that, to put it bluntly, amounts to getting it almost for free and pocketing the rest, so why on earth should they receive any further tax breaks?
Those who are capable of acquiring Kita-Yard will do so even without incentives.
The way the incentives are given—the target of the incentives—is wrong.
They should be given to the companies that come in as tenants.
Because that perspective was missing, this kind of sorry situation has arisen.”

The only remaining policy Osaka City Hall should now implement is twofold:
first, to provide tax incentives to companies that move in, and thereby bring back to Osaka the headquarters functions of world-class companies that originated here;
second, to encourage world-class leading firms from all over the globe to establish a presence in Kita-Yard.

Everything else is nothing more than sweet-sounding rationalizations, typical of regions and cities that have declined and become second-rate, and you must engrave in your hearts the fact that such rationalizations will prove fatal.

After more than twenty years of deliberation, decisions were made, and the Urban Renaissance Agency, which serves as the project window, distributed commendable project pamphlets for both Phases One and Two.
Why, then, beginning with Mr. Shimotsuma’s statement on the Asahi front page in January of this year, did people suddenly start talking about “turning Phase Two into a green forest”?

For those of you who live in comfortable detached homes with gardens and who enjoy privileged welfare facilities, it is incomprehensible to us that you chant “green, green.”
We want only a vibrant economy, and through that, a situation in which everyone can find work and salaries rise even by a single yen.
If, even after I say this again and again, you still cannot understand because you dwell in such satisfied arrogance, then I can only conclude that there is no mindset more hopeless than yours.

In closing:
The mayor of Shanghai, driven by a strong will to make Shanghai one of the world’s major financial centers, not only reduced income tax for senior executives at global financial institutions by more than 20 percent, but also provided high-end housing at very low rents.
As a result of such policies, financial institutions from around the world moved in; if I recall correctly, HSBC alone entered with a staff of some 5,000 people—the largest number of employees it has outside its home country.

(274) John Lennon – Help Me to Help Myself – YouTube