Hometown tax

Hometown Tax (ふるさと納税, furusato nōzei) is a system in Japan that allows taxpayers who live in urban areas to contribute to rural areas in return for a credit from income tax and residence tax. It was created by Yoshihide Suga in 2007.[1] On July 5, 2014, Suga's chief cabinet secretary 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 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 2000 yen can have their income tax and residence tax reduced. The amount deducted is the taxpayer's entire contribution minus 2000 yen and set amount. To receive the subtraction, the taxpayer files a final tax return.[4]　Many young people move to urban areas leaving too few 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 2000 yen [as anything above this is merely a redirection of the donor's tax from central to regional government] can net the donor 60 kg of rice, equivalent to one adult's annual consumption.[7]

Cities that have no specialty products or have no means to announce their activity received fewer contributions.[8]

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”.[9]

References
  1. Hiroaki,U. (2014). Furusato nōzei (Home tax). kotobanku Retrieved:http://kotobank.jp/word/%E3%81%B5%E3%82%8B%E3%81%95%E3%81%A8%E7%B4%8D%E7%A8%8E [July 17, 2014]
  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 Archived 2014-12-08 at the Wayback Machine [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%5B%5D [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 Archived 2014-11-30 at the Wayback Machine[June 26, 2014].
  7. "'Furusato Nōzei', tokuten de hirogaru kifu no o-rei ni 'jimoto tokusanhin', yarisugi no koe mo" 「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]. J-CAST nyūsu J-CAST ニュース [J-CAST News] (in Japanese). 8 January 2014. Retrieved 16 May 2020.
  8. 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%5B%5D [May 28, 2014]
  9. 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].
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