City Tax - Most Advantageous Payment Method?

[TokyoBoglehead]

There seems to be no advantage offered for paying your city tax bill in one go. (Unlike with nenkin).

However, if you pay quarterly, you can use a credit card in my Ku.
So that opens up the possibility of earning points

(Credit card payments must be under 20万)

It seems that this system actually incentives quarterly payments? I cannot understand why that would be the case.

Am missing something? (Ota-ku, Tokyo)

[RetireJapan]

Just paid my local inhabitants tax by credit card (all four payments at once, as I don't want to have to worry about remembering it later).

There is a fee (around 0.7%), but worth it to me to manufacture credit card spend.

[captainspoke]

I'll speak for the bank auto-deduction choice. Set it up, you'll never have to think about it again--forget about it forevermore.

Okay, you may want to note the mailings each June showing what the coming payments will be--glance at it and then just file that away for another year. There'll always be a record of your payments, they will never be late.

[Tkydon]

It really depends how big your Residents' Tax bill is, and whether you can afford to pay it in one go, or would need to pay it in installments.

If you are in employment, it is deducted from payroll in 12 installments, from June to the following May.

The Tax amount is the same, as it is actually tax collectable on the income earned in the previous Tax Year. You are paying it 6 to 18 months in arrears.
Residents' Taxes on 2022 Income are collected based on your registered address on 1-Jan-2023, and calculated after completion of Tax Filing Season (Kakutei Shinkoku), in Mar-2023, and payable from Jun-2023 to May 2024, either in 12 monthly installments in employment, or 4 quarterly installments, or a single payment.

In effect, it is cheaper for you to pay in installments. If you have the funds and invest them rather than paying them to the Municipal Government, you can earn income for the one quarter, two quarters and three quarters that the funds are invested, before paying them to the Municipal Government. If you pay them to the Municipal Government in a single payment you lose the income opportunity. Of course, the gain becomes taxable in the next tax year...

[TBS]

However, if you pay quarterly, you can use a credit card in my Ku.
So that opens up the possibility of earning points

(Credit card payments must be under 20万)

It seems that this system actually incentives quarterly payments? I cannot understand why that would be the case.

Am missing something? (Ota-ku, Tokyo)

Did you see if there is a fee (手数料) for paying by credit card? For Ota-ku it appears to be in the 0.5 to 1% range, so that offsets some of what you'd get back in points as RetireJapan said.

Potentially the city likes residents paying by credit card as it lowers the payment delinquency rate. For some people it will be easier to pay by card or a cashless app than having to go to an ATM to get cash or to the bank to do a furikomi. A lower delinquency rate then saves the city money overall due to lower overhead costs of chasing debts.

If you are in employment, it is deducted from payroll in 12 installments, from June to the following May.

...

In effect, it is cheaper for you to pay in installments. If you have the funds and invest them rather than paying them to the Municipal Government, you can earn income for the one quarter, two quarters and three quarters that the funds are invested, before paying them to the Municipal Government. If you pay them to the Municipal Government in a single payment you lose the income opportunity. Of course, the gain becomes taxable in the next tax year...

Plus one to this.

Paying by salary withholding is generally the best deal for people who have that option. It has the latest payment deadlines, and hence the opportunity benefit of investing the money in the meantime and having it work for you.

A rule of thumb I use is every month later you can pay something gains you +0.5%. That assumes you can invest instead at a 6% annual return.*

*it's +0.5% on average over the long run. obviously the market can do down and it would be a loss some months. and only people with a substantial base of investments and cash, and with low risk of going to the wall within a economic crash should be doing this yada yada

[Gareth]

I paid my residents tax directly at the city office with a pile of 500 yen coins I had saved. It’s a good way to use up saved coins without having to pay any extra charges to bank them.

[adamu]

You should also pay part of it a year in advance for free furusato nozei goodies. The free stuff probably outweighs the paperwork and time disadvantage. Probably.

Although I recently found out if you are unlucky enough to be near a marginal tax threshold, you might end up out of pocket, and figuring out the numbers is basically impossible unless you're a tax freak.

https://old.reddit.com/r/JapanFinance/c ... on_limits/

For example, the FN donation limit of a person with a taxable income of 3,300,000 yen is 85,000 yen. But the FN donation limit of a person with a taxable income of 3,301,000 yen is 5,000 yen (unless they use the one-stop system). In this way, a mere 1,000 yen increase in a person’s taxable income can trigger an enormous reduction in their FN donation limit, and I am not aware of any major limit calculation sites that take this phenomenon into account.

[captainspoke]

...
Potentially the city likes residents paying by credit card as it lowers the payment delinquency rate. For some people it will be easier to pay by card or a cashless app than having to go to an ATM to get cash or to the bank to do a furikomi. A lower delinquency rate then saves the city money overall due to lower overhead costs of chasing debts. ...

The same, probably more so, for bank auto-deduction.

Once set up, the taxee never has to lift a finger again.

[TokyoBoglehead]

Context: Wives on Maternity leave.

All this was previously automatically deducted. It's not worth setting that up as it will be handled once she returns to work.

It seems that a CC payment could be worth it if

A. That card gives at least 1 %
B. The card has benefits that are triggered at certain payment levels.

We sadly only have Rakuten, Amazon, SMBC Gold and View. Nothing exotic that will really benefit.

For someone wirh a platinum card this system would make a lot of sense.