4.1.2. Final cutting in protected forest

Depopulation and aging have long been a problem in Japan, and there have been a number of discussions regarding the end of hamlets. The Ministry of Land, Infrastructure, Transport and Tourism ([22], p. 12) predicted an increase and decrease in population at a 500-m mesh resolution based on the 2010 Population Census. Comparing the number of meshes between 2010 and the 2050 prediction, 19% of meshes changed from populated areas to unpopulated areas, and 44% of meshes showed a decreasing rate of population of ≥50%. In these areas, the

Source: Ministry of Agriculture, Forestry and Fisheries, the 2000 Census of Agriculture and Forestry.

Since most Japanese private forest owners have small holding areas, forest has an important role as household property. Such areas are too small to conduct planting and periodic cutting to receive a sufficient annual income from forest products to cover the household economy. Thus, the main deciding factor of whether to cut trees is related to the large expenditure, which has long been a characteristic of the Japanese private forest sector. In addition, daily use has disappeared and the number of non-resident forest owners has increased; therefore, the con-

The current situation surrounding private forest is changing. Generally, forest owners do not manage and work in their forest on a daily basis. This is in part because the number of nonresident owners is increasing, and will likely continue to increase in the future with the expansion of unpopulated areas. Moreover, forests are becoming land estates. At the same time, both the stumpage price and value of forest property have decreased. Under these conditions, ongoing tax reductions have the potential to encourage non-resident ownership,

percentage of non-resident forest owners is likely to increase.

Table 6. The percentage of non-resident forest owners in 2000.

sideration of forest as property is further increasing.

4.1.1.3. Forest as property

172 Taxes and Taxation Trends

The forest inheritance tax has been reduced and the fixed property tax is exempt in protected forest<sup>21</sup> where the cutting method is determined under the Forest Act. Namely, an inheritor can inherit protected forest with a low inheritance tax rate and hold the forested area without paying any property tax. Approximately 30% of non-national forest is protected.<sup>22</sup>

Under the Japanese protected forest system, forests in which cutting activities are completely prohibited exist in limited areas, while most protected forests can be cut for commercial purposes under some restrictions. However, under the current inheritance and fixed property tax, even if the forest reaches the final cutting age, protected forest owners can simply hold the forest. The government revised the Basic Plan on Forest and Forestry in May 2016, with the main goal of increasing timber production. In 2014, the domestic timber supply was 24 million m3 , which the government plans to increase to 32 million m3 and 40 million m3 in 2020 and 2025, respectively. However, under the current tax system, it is possible that cutting activities in private forests, especially under various restriction systems, such as protected forests, will not be realized as estimated.
