A few weeks ago I traveled around the Noto Peninsula to see how the area was recovering from the 7.1-magnitude earthquake that struck March 25. Some buildings had already been razed in the small, picturesque town of Monzen, though the coastal city of Wajima, which on the day I arrived was receiving a “visit of encouragement” from enka star Saburo Kitajima, experienced less damage than I expected.
Getting around wasn’t easy, but it had nothing to do with the earthquake. Wajima was once the terminal for a Japan National Railways line (which connected to a ship that went to Vladivostok), but it closed down after JNR’s privatization. The region has plenty of empty, well-maintained roads. On the peninsula, you either drive or travel by bus, and I wasn’t driving. Buses are few and far between — in some hamlets there are only two or three a day — and every one I rode was used almost exclusively by the elderly. I noticed that the terminal stops for some lines were hospitals, a logical destination for the rural demographic, which is aging more rapidly than that in the cities and suburbs.
Right now, the reason has less to do with longer lifespans and stalling birthrates than it does with statistical averaging. Young people leave the countryside and move to metropolitan areas like Tokyo, Osaka and Nagoya, where the universities and jobs are. The central government estimates that localities spend an average of 16 million yen per child from birth to high-school graduation. So when these young people leave their hometowns for the cities, where they will get jobs and pay taxes to those cities’ local governments, their hometowns lose out on their investment.
As illustrated by the well-publicized bankruptcy of Yubari in Hokkaido, more small towns and cities are facing financial difficulties, the result being a loss of services, like public transportation and localized health care, because of shrinking tax bases.
The central government’s latest scheme to address this problem is something called the furusato nozei, or “hometown tax.” Promoted by Yoshihide Suga, the minister of internal affairs and communications, the scheme, which may become part of the Liberal Democratic Party platform for the upper house election this summer, will allow citizens to earmark 10 percent of their local tax payments for the places where they grew up if they no longer live there. The ministry estimates that such a scheme could shift 1.2 trillion yen a year to struggling local governments.
Not surprisingly, officials in rural areas like the idea while those in the big cities don’t. Tokyo Gov. Shintaro Ishihara has called the plan “nonsense.” The capital would obviously lose tax revenues since the majority of people living in Tokyo didn’t grow up there.
When it was first announced the general public seemed to think the plan was a good idea. Several weeks ago it was debated live on NHK’s “Nihon, Kore Kara (Japan, From Now),” and while the people in the studio were mostly against it, viewers voting at home were 80 percent in favor of it.
Since then, the media has attacked the scheme as nothing more than a means of garnering rural votes. In a May 22 editorial, the Asahi Shimbun accused the LDP of “defaulting on its responsibility” to come up with tax reforms that address revenue disparities. The hometown tax just moves revenue from one local government to another, thus alleviating any burden on the central government. The Asahi supports a plan by LDP General Secretary Hideo Nakagawa to give tax breaks to people and organizations who make contributions to local governments and called for revising the consumption tax law so that more national revenue would go to outlying areas.
The Yomiuri Shimbun was less critical but still thought it was a bad idea in principle, since people supposedly pay local taxes for services they receive now rather than services they received in the past. Practically speaking, many citizens move more than once, so how does the government determine which of their previous residences is their “hometown?”
It isn’t the first time the LDP has come up with a cosmetically novel idea to help local governments. In 1988, there was the Furusato Renaissance, which gave 100 million yen to every local government in the country to do whatever they wanted to do with it. Some of the uses were conventional (invest in housing, land trusts, etc.) but most were odd (one town built the biggest scarecrow in the world), since there isn’t much you can do with a lump sum like that except try to attract attention with it.
In 1999, the government distributed “regional promotion coupons” through local governments to certain households. The coupons could only be spent on goods and services produced in their areas. The idea was to stimulate local economies, but 32% of the coupons were spent on necessities that the purchasers would have bought anyway. The plan’s political utility was obvious. The New Komeito actually came up with the coupon idea and the LDP only supported it in order to get Komeito to join their ruling coalition.
The hometown tax is just as political — and gimmicky. Sadakazu Tanigaki, who came in third for the LDP chairmanship last Sept., is the author of the idea. By affixing “furusato” to the scheme Suga made it more appealing, since the word automatically makes people feel all warm and fuzzy. Ishihara called it a “sentimental” ploy to make it seem as if the LDP actually cared about people in rural areas.
But with each passing day fewer people are fooled. Last week, a group of regional city mayors called on the LDP to abandon the hometown tax and carry out genuine fiscal reform that would provide outlying areas with the money they need to survive. It shouldn’t take an earthquake to get the central government to pay attention to the countryside.