Last year, nearly nine million taxpayers in a country of 125 million people participated in the system – more than at any time since it was introduced in 2008. The program was created to help rural areas increase their tax revenues due to the Population decline in Japan and the exodus to big cities.
The idea behind this was for city dwellers to support their former home regions and receive something in return. The palette is immense: it ranges from local specialties and products from the region – such as seafood, fruit and vegetables – to a year’s supply of toilet paper, test drives in a Porsche, gift cards for hotels and restaurants and a period of one day as mayor.
Getty Images/Ladanifer Seafood is highly valued in exchange for donations
competition between municipalities
A portion of donations is tax deductible, to calculate the exact amount there are several online calculators available. The “Furusato Nozei” thus became a popular way of reducing the tax burden. In the last fiscal year (March 2022 to March 2023), donations under this system totaled nearly 1 trillion yen (about €6.3 billion).
Municipalities satisfied in this way are officially allowed to spend 30 percent of the additional tax revenue on grants to donors. However, plans for the program appear to have overlooked a key part – namely that it could lead to harmful competition for funds, as the Wall Street Journal (“WSJ”) recently reported.
AP/The Yomiuri Shimbun/Masamine Kawaguchi Also for Sale: Dozens of Packets of Toilet Paper
I shopped online
Because the original idea that the money should benefit taxpayers’ home regions no longer corresponds to reality. Many people in Japan now equate the program with shopping online – you can search for the best gift options on more than a dozen platforms, on blogs regional donations are evaluated.
Attachment to a particular place plays a very subordinate role. The Japanese Ministry of the Interior recently warned: The system was not designed as a shopping platform, but now it would be.
According to a report by the World Economic Forum (WEF) earlier this year, three of the top five fundraising locations in 2021 were cities in Hokkaido Prefecture, Japan’s second-largest island known for its fish and seafood specialties. high quality. The city of Mombetsu in Hokkaido, which ranked first nationally, raised about 15.3 billion yen (US$150 million) in donations.
joy and sadness
Where there are winners, there are losers. Tokyo’s Setagaya Ward, home to more than 900,000 people, the most populous prefecture in the prefecture, has been particularly hard hit. For the financial year ending March 2024, the district expects a loss of nearly €65 million in tax revenue, previous years not looking much better. According to the WEF, more than €377 million from Tokyo’s 23 wards flowed to other municipalities in the 2021 financial year.
APA/AFP/Philip Fong Setagaya resisted the reward system for a long time, but then had to give in
“This system is a mistake,” Setagaya chief administrator Nobuto Hosaka told the WSJ. If losses continue to mount, the district may struggle to fund day-to-day services such as road repairs and garbage collection. Setagaya also refused to hand out tax appreciation gifts for years. Faced with falling incomes, they finally felt compelled to participate. Donations have doubled since then.
The sense of origin has been lost
“It turns out that people decide where to donate based on the gifts,” said Kazuya Misawa, a senior official in the port city of Numazu on the island of Honshu. “So we thought about how we could differentiate ourselves from other cities and communities.” The answer: a short welding class taught at a local steel mill. As unusual as the offer may be, there is another demand: according to the person in charge, the toilet paper packs with 96 rolls manufactured in a local factory are among the most popular gifts.
The World Economic Forum concluded its report on “Furusato Nozei” with the words: “It is time for Japan to return tax revenues to their original purpose. Both in terms of solving social problems, balancing public services and sustainable revitalization. of communities.”