Hometown tax explained

The is a system in Japan that allows taxpayers who live in urban areas to contribute to rural areas in return for a tax credit from income tax and residence tax. Its creation was announced by the Minister for Internal Affairs and Communications Yoshihide Suga under Prime Minister Shinzo Abe in 2007.^[1] In July 2014, Abe's then chief cabinet secretary Suga announced that they had established the preparatory office for the “local headquarters”.

The local headquarters was established to help increase the number of children, especially in rural areas, and to promote the development of self-governing bodies. Promoting “hometown tax” is included in these activities.^[2]

History

In the spring of 2008 the "Hometown tax" law was legislated in Japan.^[3]

Function

Taxpayers who contribute more than 2,000 yen can have their income tax and residence tax reduced. The amount deducted is the taxpayer's entire contribution minus 2,000 yen and set amount. To receive the subtraction, the taxpayer files a final tax return.^[4] The reasoning is that many young people move to urban areas, leaving fewer people to pay rural taxes. Taxpayers choose the receiving jurisdiction.^[5]

Evaluations

Cities that offered "gifts" of local products received up to 60 million yen.^[6]

The use of gifts has been criticized as distorting the results: for example, an effective donation of just 2,000 yen can net the donor 60 kg of rice, equivalent to one adult's annual consumption.^[7] Anything above the 2,000 yen is merely a redirection of the donor's tax from the central government to a regional government.^[8]

Cities that have no specialty products or have no means to announce their activity received fewer contributions.^[9]

Yamagata prefecture

In Yamagata Prefecture, contributions have been increasing. For example, Obanazawa city and Mogami town received several million yen in 2013. They use gifts and the Internet to collect contributions. For example, Obanazawa, Yamagata offered gifts of “Obanazawa watermelon” and “sirloin steak of Obanazawa-gyū”.^[10]

Notes and References

1. Web site: Kanaya . Toshihide . 2019 . 「ふるさと納税」の解説 . Explanation of "Hometown Tax Payment" . live . https://archive.today/20210722033632/https://kotobank.jp/word/%E3%81%B5%E3%82%8B%E3%81%95%E3%81%A8%E7%B4%8D%E7%A8%8E-183884 . 2021-07-22 . 22 July 2021 . Kotobank.jp . Voyage Marketing . Japanese.
2. ”Suga chief cabinet secretary express the intention of the establish the preparatory office for the headquarters of local creation at the middle of this month. (2014, July 5). Sankei News Retrieved: http://sankei.jp.msn.com/politics/news/140705/plc14070520480026-n1.htm [July 17, 2014]
3. Home tax start. (2008, May 16). Shinnwakaikei group Retrieved: http://sinwagroup.jp/tax/tax-qa/qa-new-tax-system/post352.html [July 14, 2014].
4. about home tax. (2014). sōmusyō the Ministry of Public Management Retrieved: http://www.soumu.go.jp/main_content/000254924.pdf [July 17, 2014].
5. How do we think about home tax. (2007, June 19). Nihonn nōgyō Shimbun Japanese Agriculture Newspaper Retrieved: http://www.pref.fukui.jp/doc/kenmin/chijipublication/190619nihonnougyousinbun.html [July 17, 2014]
6. Tuna, Beef…local special products make “Home Tax” much increased. (2014, May 6). MSN Economy News Retrieved: http://sankei.jp.msn.com/economy/news/140506/biz14050609550005-n1.htm [June 26, 2014].
7. News: 'Furusato Nōzei', tokuten de hirogaru kifu no o-rei ni 'jimoto tokusanhin', yarisugi no koe mo . ja:「ふるさと納税」、特典で広がる 寄付の御礼に「地元特産品」、やりすぎの声も . 'Hometown Tax' spreading thanks to benefits, 'Local Produce' sent in exchange for donations, some voices critical . 16 May 2020 . J-CAST nyūsu . ja:J-CAST ニュース . J-CAST News . 8 January 2014 . ja.
8. News: 'Furusato Nōzei', tokuten de hirogaru kifu no o-rei ni 'jimoto tokusanhin', yarisugi no koe mo . ja:「ふるさと納税」、特典で広がる 寄付の御礼に「地元特産品」、やりすぎの声も . 'Hometown Tax' spreading thanks to benefits, 'Local Produce' sent in exchange for donations, some voices critical . 16 May 2020 . J-CAST nyūsu . ja:J-CAST ニュース . J-CAST News . 8 January 2014 . ja.
9. At ōyamazaki city, only 4 “home tax” was used. (2014, May 27). Kyōto shimbun Newspaper Retrieved: http://headlines.yahoo.co.jp/hl?a=20140527-00000007-kyt-126 [May 28, 2014]
10. At Yamagata prefecture, “home tax” rapidly inzrease because “return presents are luxury” and “formalities became easy”. (2014, May 18). yamagata shimbun Newspaper Retrieved: http://headlines.yahoo.co.jp/hl?a=20140518-00000341-yamagata-106 [May 26, 2014].