Many towns and cities in Japan are in a crisis. The Japanese population overall is growing older and smaller as it is. On top of that, the younger generations are moving to the big cities like Tokyo, Osaka, Kyoto, etc. Leaving fewer and fewer left to pay inhabitant taxes, small cities are strapped for cash. As a result, the rural areas are having trouble maintaining its infrastructure.
In 2008, the Japanese government counteracted by introducing a unique system, “Hometown Taxes“.
Older, Fewer, Emptier
Japan is the “Oldest” country in the world. As of 2018, 28.1% of its population is over the age of 65 and the rate is still growing. By the year 2060, this rate is estimated to reach 40%. The total population has also been in a decline for consecutive 10 years.
However, people who have visited Japan recently might have not noticed this. Since the prefecture foreign tourists visited the most in 2018 is Tokyo, where the rate of citizens over 65 which was 23%. 5% lower than the countries average.
Akita prefecture on the other hand, has the highest rate of 35.5%. More than 1 out of 3 people here are retired and elderly. Since most of these elders live off their pensions and pay low taxes, these aging prefectures have very low residential tax income. This makes it harder to maintain the necessary infrastructure their citizens need.
A Way To Give Back To Your Hometown
In 2008, Japanese Prime Minister Shinzo Abe introduced a new tax system called “Hometown Taxes”. For a fee of 2000 yen, citizens are now able to pay their residential taxes to any city of their choice. Technically, hometown taxes are not taxes, but donations. The amount you contributed will be deducted from the residential tax due the next year.)
The number of citizens choosing to use this system are increasing. In the initial year 2018, 33149 citizens donated over 7 billion yen.
What made this new system catch peoples attention? The fun part is, some cities offer locally produced items as gifts to the donators.
From Towels to Takoyaki
Lets take a look at one of the major Hometown Tax sites, “Satofuru”.
Here, you can see what kinds of gifts each city offers. The most popular are foods, such as branded meats, branded fruits, seafood, beer, rice, etc. There are also consumer products like kitchenware, baby diapers, even theme park tickets. You’ll be surprised at what you can find.
Lets look at an example. If you donate 15000 yen to Yoro city, you will be sent two branded beef steaks (400g). If you bought this normally, it would cost you around 11000 yen. The amount you donated will be deducted from your residential taxes due next year.
Like I shared earlier, you can get anything available for a fee of 2000 yen (roughly 20 USD). If you choose to donate in a way you’ll receive gifts that have 12000 yen in value, you will save 10000 yen. So it’s not hard to see why this system gained notice very quickly.
The Downside
Like all government policies, this too has its downside. In July 2019, Izumisano City along with three others were eliminated from the Hometown Tax system by the Ministry of Internal Affairs and Communication for “giving too much back to the donators”. Izumisano city for example offered to give back 30% of the donation back as Amazon gift cards on top of the initial gifts (I personally donated 30000 yen to Izumisano City and received 50000 yen worth of branded beef and 9000 yen worth of Amazon gift cards).
Naturally, this lead to an unwanted focus of the donations and caught the governments eye. Since this system was first introduced to balance out the residential tax across the country, the government decided to ban cities that were being too generous and set a limit to the value of gifts cities were allowed to offer. Since July, every city participating in the Hometown Tax system are only allowed to offer gifts with a value of 30% of the donation or lower.
Another victim of the system are the big cities. These cities are in a major residential tax deficit due to its inhabitants donating elsewhere. Some say this could impact the cities power to maintain its high level of infrastructure the people living there need.
So is this new system a success? It’s hard to give a yes or no answer. The government will need to spend more time collecting the data to do a proper analysis.
However, one things for certain. The ones who are benefiting the most are the general citizens. So if you are going to move to Japan by any chance, be sure to check this out. There’s definitely something you’ll be interested in and you can have anything for 20 bucks.
kyuto
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