Japan’s hometown tax payment system comes under scrutiny


The internal affairs ministry will survey local governments about how they operate the so-called hometown tax payment system in hopes of boosting taxpayers’ donations to municipalities of their choice.

The ministry will announce the results in August, officials said.

Under the system introduced in 2008, taxpayers are granted tax breaks if they donate ¥2,000 or more to places they no longer reside in or to local governments they support.

Many people have used the system to make donations to areas damaged by the March 2011 earthquake and tsunami.

Some point out that the hometown tax payment system is not user-friendly due to differences between municipalities in the way the system is operated. The ministry hopes to find out the actual conditions, the sources said.

For instance, some local governments accept donations at convenience stores and with credit cards, while others only accept money transfers through bank accounts.

In an attempt to attract donations, an increasing number of municipalities offer local specialties, such as rice or sake, to donors, with some governments providing luxury items.

The ministry will ask municipalities whether and what they are offering in return for donations under the tax system and check if there are any problems involved.

In the survey, local governments will also be asked about their efforts to reduce paperwork, such as income tax returns, by donors, as well as how donations are used and how they publicize the hometown tax system.

The ministry plans to sort out problems based on the survey results and call on municipalities to try to make the system more user-friendly, the officials said.