Furusato Nozei

This is a really stupid system


Have you heard of the furusato nozei (hometown tax deduction)?

I think there are three levels, like in this absolutely incredible explanation of Inception.

On one level, furusato nozei allows people to decide where their local inhabitant taxes go. Instead of paying them to the city they live in, they can send them to another locality in Japan. I guess the people that designed the system imagined people would send it back to the rural areas they moved away from. This level seems fine, even laudable.

On another level, people don’t have to send the tax to their own hometown. Instead, they can designate pretty much anywhere in Japan. So localities started sending people little ‘thank you’ gifts, in exchange for their tax yen. And of course this escalated, so we now have portal websites full of rankings of the various ‘gifts’ offered as bribes. Prime beef seems to be popular, as is rice, or beer. At this point the cost of the gifts probably uses up a lot of the tax donation. This level is where things start getting a bit corrupt.

On the deepest level, I think this is a net negative for the country. Basically you can send your local inhabitant taxes somewhere else in exchange for an extravagant gift. You pay a 2,000 yen fee, and receive much more than that in ‘gifts’. The locality you sent your tax to is happy to spend most of it on the ‘gift’ because any tax yen they get is a bonus. The city where you live gets screwed out of the taxes they need to provide you with services. And this level shows why I think the system won’t be sustainable, particularly if lots of people start doing it.

So under the furusato nozei system, the individual gets some swag, the receiving locality gets a slight increase in tax revenue, and the country as a whole loses out.

Naturally I decided to try this out for myself 🙂

This is the government site explaining the system. I am going to ask our accountant about how much we can ‘donate’, as it depends on your income and how much local inhabitants tax you pay. Details are here. If you choose a locality that supports it, you don’t have to do a tax return either.

Rather than search for the most lucrative offer possible, I am planning to send my taxes to Osato (you may remember the name from my post about moving to the country) as we may end up buying property there and it’s a small town office. According to their website, they only had 19 donations last year, so becoming a donor should bump me up a few places in the Akiya Bank queue 🙂


If you want to avoid an otherwise unnecessary tax return, you need to finish everything by the 10th of January, so if you are interested in trying this you should get a move on.

Anyone doing this already? How are you finding it? What are the best deals/sources of information?
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13 Responses

  1. ive done this for two years in a row and am a bit disappointed with the quality of the gifts…..cant complain though, its basically free because of the tax write off.
    it proved to be helpful for areas hit by disasters. i think areas around kumamoto really benefitted from the scheme.
    it absolutely sucks for municipalities without the resources to put money into the pr campaigns. they will always lose out to the larger, wealthier areas.

    1. Hi JM
      So the ‘gifts’ aren’t as good as they seem from the glossy pictures, eh?
      We’re going to go with beef or beer, I think 😉

  2. Been using it not to get perishable food, but rather to acquire much needed household items like blankets, chairs, tables etc.
    Pretty good system to get a tax refund, less 2000 yen of the initial donation, AND still get something practical for everyday use.
    Personally use one of the many tax calculators available on the internet to estimate the annual upper limit of contributions, and round it down for safe measure.
    One tip here is to use this website, as they allow credit card payment via Yahoo, which in turn means being able to use all of the T-Points one has for an effective 1% cashback.
    http://bit.ly/2gUY8JW

  3. Have always found it hard to make a choice (the abundance is overwhelming). Just “ordered” (eh sorry I mean donated, and going to get as a gift in return:) a *LOT* of domestic craft beers. Can never have enough I guess. 🙂

  4. yes, the choices are overwhelming. we usually settle on steaks since my wife doesnt drink much. id like to know how much it costs the cities to do all the advertising. it seems like a losing proposition…then again, i have an awfully hard time wrapping my head around a lot of decisions made in this country.

    1. Ha ha, definitely. The thing is, for the local governments getting the money, it makes sense for them to spend up to 90-95% of the donation on gifts/advertising, as anything leftover is extra money.
      Not so for the country as a whole. I’m guessing this will be shut down at some point. or at least some kind of limit will be imposed on the goods they can provide.

  5. Sounds exactly like the kind of system I hate: it feels wrong to abuse it, but if you don’t, you’re one of the suckers who doesn’t benefit something everybody else does. Just like that time I started paying for NHK when nobody else in the country does.

  6. I agree with your analysis btw and it is hard to see how this system benefits Japan in any real way.
    What I find most puzzling however is that the tax deduction, as % of yearly income, actually goes *up* with your yearly income.
    For example:
    Income: 5MJPY –> Deduction ~61,000JPY (~1.2%)
    Income: 20MJPY –> Deduction ~560,000JPY (~2.8%)
    Income: 25MJPY –> Deduction ~845,000JPY (~3.4%)
    So not only is this system strange in how it is not effective at distributing taxes to the jichitai, but it also disproportionately benefits those with higher incomes as they are able to “donate” more and receive more “gifts” for essentially the same resulting 2,000 jpy.

  7. The municipality where I live spends taxes on stuff that virtually no one wants while not spending money on stuff that we want more of… so I’m actually very happy to starve them of money to waste and ensure someone who worked hard for the money (me!) gets to enjoy more benefits of it, and people who produce things of value to others will get more money in return.
    I don’t know if that’s how everyone feels about the way their local taxes are spent, but if it is then I think this system could be a good thing for the country overall, too.