The furusato nozei system is designed to support the revitalization of local communities through goodwill contributions. It is important to return to this primary purpose of the program.
A bill to revise the Local Tax Law, which includes revisions to the tax deductible donation system, has been passed into law. Beginning in June, the internal affairs and communications minister will designate local governments that are eligible to use the system. The move will, in effect, transform the program into an approval system aimed at curbing competition among local governments in offering excessive gifts in return for donations.
If a person donates money to a certain local government, the furusato nozei program gives that person deductions from their residence and other tax payments, in an amount close to that of their contribution. This is nearly tantamount to paying part of one's tax payments to the local government chosen.
The original objective of the system was for people to support their hometowns, or local governments that have supported them, through donations to those entities. The program was also intended to rectify disparities in the amount of tax revenue in urban and rural areas. Collecting a large amount of donations through luxurious return gifts runs counter to the purpose of the system.
In fiscal 2018, the city government of Izumisano, Osaka Prefecture, is expected to collect about 36 billion yen by offering not only various return presents but also gift certificates. The figure seems excessive compared with the municipal government's general-account budget of about 56 billion yen.
Revising the local tax law was unavoidable, given that the primary purpose of the system had been distorted due to some local governments' excessive behavior.
Since 2017, the Internal Affairs and Communications Ministry had continued to notify local governments to keep their expenditures for return gifts within 30 percent of the donations received, but many did not abide by that instruction. Under the new system, local governments will not be able to use the program if they do not follow that criteria.
Stress policies, not presents
There is every reason to dispel the sense of unfairness between local governments that have accepted the instruction and those that have not obeyed it.
Local governments also must limit their return gifts to local products if they want to be designated in this respect. At the same time, however, the new system also entails a measure by which their lists of return gifts are allowed to include goods produced in other areas within their prefectures. This is understandable, as it is intended to show consideration for local governments that do not have any noted products to offer.
The new system will also ban such showy advertisements as "Otoku" (It'll save you money). The ban has been established in response to criticism that using such ads looks like a mail-order business.
Local governments should strive to gain the support of donors not through return gifts but through ideas and policies. They should also make all-out efforts to disclose information about the purpose of using revenue from donations, such as how these resources have been utilized for community development.
When designating local governments eligible for the system, the ministry will take into account how local governments have responded since it announced its reviews of the system.
The ministry is also set to reduce the amounts of special local tax allocations to the four city and town governments for March, including Izumisano, that have continued to collect a large amount of donations.
Some may view the move as punishment for local governments that have not followed the ministry's policy. The ministry should take care to prevent the spread of anxiety among local governments.
It is a fact that return gifts have raised public interest in the system, thereby increasing momentum for paying attention to regional areas. The ministry should strive to ensure the system is firmly established, while paying attention to any harmful influence that may result from it.
(From The Yomiuri Shimbun, April 7, 2019)
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