The total amount of money collected under the furusato nōzei (hometown tax donation) system in fiscal 2020, which ended in March, rose to a record high of ¥672.5 billion, it was learned Wednesday.

The figure jumped 1.4-fold from ¥487.5 billion in the previous year.

The number of donations rose to around 34.89 million cases, hitting a record high for the 12th consecutive year since the system was first introduced.

The surge apparently reflects a rise in donors looking to enjoy regional products given as return gifts while staying home amid the COVID-19 pandemic.

Under the furusato nōzei system, people can make donations to local governments of their choice and qualify for residential tax breaks in exchange. Many recipient local governments offer gifts to donors in return.

The city of Miyakonojo, Miyazaki Prefecture, received the highest total donations at ¥13.53 billion, followed by the city of Monbetsu, Hokkaido, at ¥13.39 billion, and the city of Nemuro, also in Hokkaido, at ¥12.55 billion.

The total amount of residential tax breaks to be given under the system in fiscal 2021 came to some ¥431.1 billion, 1.2 times that of the year before.

Yokohama saw the largest deductions at ¥17.70 billion, followed by Nagoya at ¥10.65 billion and the Osaka at ¥9.18 billion.

The amount of the donation minus ¥2,000 is deducted from the donor’s residential tax.

The system was changed in June 2019 to limit return gifts to local products worth 30% or less of the amount of donations, after some municipalities raced to offer expensive return gifts under the old system.

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