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    Impact of Infrastructure Investment on Tax: Estimating Spillover Effects of the Kyushu High-Speed Rail Line in Japan on Regional Tax Revenue

    Yoshino, Naoyuki; Abidhadjaev, Umid | May 2016
    Abstract
    This paper analyzes the impact of infrastructure investment on tax revenues and on the economy of the region. In 1991, the Kyushu high-speed rail line was constructed and was completed in 2003. In 2004, the rail line started operating from Kagoshima to Kumamoto. The entire line was opened in 2011. The effect of the Kyushu high-speed rail line (shinkansen train) on the economy has often been debated. We estimated its impact in the Kyushu region of Japan by using the difference-in-difference method, and compared the tax revenues of regions along the railway line with other regions that were not affected by the railway line. Our findings showed a positive impact on the region’s tax revenue following the connection of the Kyushu rapid train with large cities such as Hiroshima and Osaka. Tax revenue in the region significantly increased during construction in 1991–2003, and dropped after the start of operations in 2004–2010. The rapid train’s impact on the neighboring prefectures of Kyushu is positive. However, in 2004–2013, its impact on tax revenue in places farther from the rapid train was observed to be lower. When the Kyushu railway line was connected to the existing high-speed railway line of Sanyo, the situation changed. The study found statistically significant and economically growing impact on tax revenue after it was completed and connected to other large cities such as Hiroshima and Osaka. Tax revenues in the regions close to the high-speed train is higher than in adjacent regions. The difference-in-difference coefficient methods reveal that corporate tax revenue was lower than personal income tax revenue during construction. However, the difference in corporate tax revenues rose after connectivity with large cities was completed. The railway’s connectivity to large cities has a significant economic impact not only in the case of Japan but also in other cases such as Uzbekistan.
    Citation
    Yoshino, Naoyuki; Abidhadjaev, Umid. 2016. Impact of Infrastructure Investment on Tax: Estimating Spillover Effects of the Kyushu High-Speed Rail Line in Japan on Regional Tax Revenue. © Asian Development Bank Institute. http://hdl.handle.net/11540/6486.
    Keywords
    Development strategy
    Development models
    Economic development
    New technology
    Rural planning
    Aid coordination
    Industrial projects
    Infrastructure projects
    Natural resources policy
    Educational development
    Absorptive capacity
    Development Planning
    Development Research
    Technology Development
    Aid And Development
    Asian Development Bank
    Comprehensive Development Framework
    Development Cooperation
    Development Management
    Development Planning
    Development Strategies
    Rural planning
    Regional development bank
    Project finance
    Strategic planning
    Infrastructure projects
    Government programs
    Public finance
    Public enterprises
    Development
    Economics
    Development In East Asia
    Development Planning
    Development Research
    Technology Development
    Aid And Development
    Asian Development Bank
    Comprehensive Development Framework
    Development Cooperation
    Development Management
    Development Planning
    Development Strategies
    Development strategy
    Development models
    Economic development
    New technology
    Rural planning
    Aid coordination
    Industrial projects
    Infrastructure projects
    Natural resources policy
    Educational development
    Absorptive capacity
    Economic development projects
    Economic forecasting
    Economic development projects
    Municipal government
    Technology transfer
    Exchanges of patents and technical information
    Technical education
    Technology
    Communication in rural development
    Communication in community development
    Economic development projects
    Development banks
    Economic forecasting
    Environmental auditing
    Cumulative effects assessment
    Human rights and globalization
    Transfer Technocracy
    Absorptive capacity
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    Citable URI
    http://hdl.handle.net/11540/6486
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    Author
    Yoshino, Naoyuki
    Abidhadjaev, Umid
    Theme
    Development
    Economics
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise