In Japan, the perfect tax-deductible gifts: face masks and sanitizers

Osaka – With supplies of face masks and sanitizers running short amid the COVID-19 pandemic, some municipalities have begun to offer such items as gift incentives as part of the furusato nōzei (hometown tax donation) system rather than local products like meat or fish.

The government of the city of Sennan in Osaka Prefecture began offering handmade gauze masks under the program to attract tax-deductible donations, but had to suspend the item due to a surge in orders.

Since switching to a mask made of toweling earlier this month, the city has drawn more than 700 donations in about two weeks. The mask, produced by local towel manufacturers who face increasing competition from low-priced Chinese towels, is said to be comfortable and absorbent.

“It is a product using traditional local technology,” said Masaki Ito, a local official in charge of promoting the policy. “We hope that this will help ease a shortage of face masks.”

The tax program, launched in 2008 as a way to boost revenue for rural areas, allows taxpayers to make donations to their hometowns or other municipalities of their choice. In addition to receiving a tax cut, participants may also be encouraged to participate with gifts that are typically local specialties.

After fierce competition developed among local governments that offered expensive gifts such as shopping vouchers and personal computers, the program was limited to gifts produced locally and with a value of less than 30 percent of donations.

But since the arrival of the new coronavirus that causes COVID-19, people have been eager to accept hometown tax gifts such as the 20-liter containers of disinfectant solution offered by the city of Saga. Although people must donate more than ¥20,000 ($185) to receive the gift, the number of donors is nearing the same level as those seeking other popular rewards such as beef or rice.

According to a website that lists gifts offered in return for hometown tax donations, the ratio of donors who opted for daily necessities such as face masks and toilet paper this month has tripled in comparison to last December.

Kota Fukuda who heads Colleagues Inc., the operator of the website, said the program is appealing to those who wish to assist revenue-strapped local governments at a low cost, thanks to the tax deduction, while also receiving practical items such as face masks that have become expensive amid the pandemic.

Fukuda expects demand for daily necessities as hometown tax gifts will continue to rise, since the end of the COVID-19 outbreak is not yet in sight.