FURUSATO NOUZEI, Local tax payment to your favorite town

Originally, you can not choose which city you pay your local tax to. It is prescribed by Local tax act to pay it to the government which has the jurisdiction over your residence.
However, under the so-called "Furusato Nouzei system", you can get the similar effect to some extent. You can pay a certain proportion of your local tax amount to your favorite town(s).
Furusato Nouzei means "tax payment to your home town" if literally translated. However, it should be called formally "Furusato Donation". It is one of the preferential treatments on taxation for donations.
The detail is rather complex. For example, if you make a donation of 10 thousands yen to a local public body (a Prefecture or a Municipality), you can receive a benefit corresponding to the donated amount by decreasing tax burden. The total of your income tax amount, which means the total of the National income tax and the Local income tax, shall be decreased by the corresponding amount. Here, this corresponding amount shall be calclulated by subtracting 2 thousands yen from your donation amount. So, in the case mentioned above, your tax burden shall be decreased by 8 thousands yen.
Please note the limitation amount is set for this treatment. Although it is also complex and difficult to understand, you can roughly regard 20% of your local tax amount, or 2% of your taxable income, as the limitation amount to enjoy the Furusato Nouzei preferential treatment fully. When the donation amount is within this limit, your final burden(the substantial donation amount) goes up to no more than 2 thousands yen.

〔In Japanese〕

しかし、ふるさと納税制度によることで、同様の効果を得ることができます。貴方の住民税の一定割合を、好きな町に納付することができるのです。”ふるさと納税” といっても、文字通り、税金の納付先を選べるわけではなく、厳密には”ふるさと寄付金”と呼ぶほうがよいでしょう。この制度は、寄付金に関する優遇税制の一種です。

Gift in return for Tax ?

Furusato Nouzei system was introduced several years ago. It has become very popular and gained a secure position in a short time. The reason is not because you can assist your hometown or another favorite town with this system, but because you can get various cuisines, indigenous products or other gifts from the public bodies you give your donation.
There is no issues for a public body to offer a return gift for "DONATIONS", naturally.
However, when we considered how the Furusato Nouzei system practically worked, it brought up a worrisome issue. Is it reasonable and justified to give a return gift for tax payment? The National government indicates these return gift should not be too gorgeous. It also indicates local bodies should offer products or services characteristic of the districts. Local bodies want to attract donations as much as possible. The competition among them can go too overheated, at the sacrifice of the original tax amount to be paid at the residential address. Eventually a few municipalities are excluded from this tereatment by the tax revision of 2019. Hereafter, you can pay attention to check whether the municipality to which you make a donation is qualified or not.

Anyway, if you can get various things for the 2 thousands yen donation, the merit is large. I recommend you to take advantege of this system and to find attractions of Japan.

〔In Japanese〕

地方公共団体が、受けた寄付に返礼をすることには問題はありません。しかし、このふるさと納税制度が実際にどのように機能しているかを考えると、なかなか厄介な問題が生じてきます。税金に対して、その対価となる物品を交付することは正当化できるのでしょうか? 国からは、返礼品は高額になりすぎるべきでないという示唆がなされていますし、また、その内容も各地の特産品によるべきだとされています。各地方団体はなるべく多くの寄付を集めたいと思っていて、本来、その住所地で納められるはずだった税額を削りながらの競争が過熱する恐れがあるのです。結果として、2019年の税制改正により、いくつかの市町村は、この制度の対象から除外されました。今後は、貴方の寄付先が、この制度の対象となっているかどうかを確認する必要があります。


By the way

I have made donations to Gotsu city, many years in a row from the very year this system was introduced. I got various presents from Gotsu, such ast Pig meet, Pottery cups, and other goods before.
One of the most favorite gifts I got is the series of the craft beer, produced in Gotsu.
You can check the wonderful product at Iwami Bakush's site.

〔In Japanese〕

お気に入りの一つは、江津で生産された地ビールです。 生産者である株式会社石見麦酒のWEBサイトで商品内容を確認できます。