Donations to municipalities that qualify as tax-deductable soared over fourfold in fiscal 2015 from a year earlier, the government said Tuesday.
The donations in fiscal 2015 totaled ¥165.29 billion, compared with ¥38.85 billion in fiscal 2014, the Internal Affairs and Communications Ministry said.
It attributed the surge to the doubling in April last year of the maximum total allowable as well as municipalities offering increasingly attractive incentives.
The explosion has caused concern about growing competition between municipalities, with some localities offering items such as vouchers that can be easily converted into cash.
Miyakonojo in Miyazaki Prefecture was the largest recipient of such donations, netting ¥4.23 billion in total. It was popular for its thank-you offerings of local beef and shochu spirits.
It was followed by Yaizu, Shizuoka Prefecture, with ¥3.83 billion, and Tendo, Yamagata Prefecture, with ¥3.23 billion.
The so-called hometown tax payment program started as a way to ease disparities in tax revenues between urban and rural areas by enabling people to donate their money to a municipality of their choice and earn a lower tax bill as a result.
While many municipalities send donors local produce such as meat, vegetables and seafood, some offered coupons and personal computers, which can easily be resold on internet auction sites.
Ministry officials have expressed concern that if financially viable municipalities lure donors with expensive gifts it will skew the spirit of the program, which aims to alleviate tax revenue disparities.