Ministry plans to bar four local governments from Japan's new hometown tax donation system

JIJI, Kyodo

The internal affairs ministry plans to exclude four municipalities from the revamped furusato nōzei (hometown tax donation) program, which will be introduced in June, it was learned Thursday.

The excluded municipalities are Izumisano in the prefecture of Osaka, the town of Oyama in Shizuoka Prefecture, the town of Koya in Wakayama Prefecture and the town of Miyaki, Saga Prefecture.

The ministry ruled that the four municipalities should not be included in the new system for tax deductions after they received large donations via the old system through inappropriate methods, such as by sending lavish thank-you gifts, according to informed sources.

It plans to reach a final decision on the matter by the end of next week at the earliest, following discussions held by the Local Public Finance Council, which advises the ministry.

The new system, aimed at cooling down heated competition among local governments to offer expensive thank-you gifts, will limit such gifts to locally produced items that are worth 30 percent or less of the value of the donation.

Only municipalities adhering to such standards will be included in the system.

Donors will be ineligible for tax deductions if they donate to the local governments that are excluded in the revamped system.

The ministry will decide whether to include municipalities in the new system by examining how they received donations during and after November last year.

The ministry has said it will look into whether the local governments collected significant amounts of donations compared with other municipalities in a way that went against the purpose of the system, including providing pricey return gifts.

A total of 1,787 local governments have applied for the new system. All but the four municipalities are expected to be covered in the new system.

Izumisano and Oyama collected large sums of money late last year and sent donors Amazon Japan gift cards in return.

In apparent resistance to the central government’s decision, the Izumisano Municipal Government in Osaka Prefecture started a campaign in late April aimed at receiving more donations under the current furusato nōzei system before it is officially revamped next month.