RetireJapan

Deep Blue wrote: ↑Wed Mar 13, 2024 2:14 pm Furusato nozei is insanity for the Japanese government. I'm shocked it hasn't been shut down yet. But I hope it does live on as we make very full use of it.

Deep Blue wrote: ↑Thu Mar 14, 2024 7:14 am I think it’s a terrible system but I pay more than enough tax here so happy to get some nice stuff back out. I do think it will be scrapped at some point though as it’s just an insanely stupid way doing things.

JimNasium wrote: ↑Thu Mar 14, 2024 3:58 am I was asking some friends and people I know about Furosato Nozei, and I was surprised the majority opinion was it’s a terrible, unfair system and should be done away with.

I don't know why you say that.

Their target is the Japanese residents of the Rich Metropolises.

In reality, the residents of the Rich Metropolises are simply transferring the Residents' Tax they (would have to) pay from the Rich Municipality that is awash with tax revenue and really doesn't need the money, to the Remote Impoverished Municipality of their choice to support their rural economy, for which the remote municipality provides a token of their appreciation that they can buy Wholesale from their local producers and provide to you as a gift for your donation. By cutting out the middle men, and not having to pay transportation and distribution costs, retail rents and labour costs in your Expensive Municipality, it seems like you are getting a bargain.

You could travel to those remote locations and buy directly from the producers or the local Michi No Eki...
but then you have to devote your time and pay for the transportation, or you could order them remotely and takyuubin...
If they sold the goods to a big Wholesale Distributor, the margin to the local producer would be far less, so they end up making more money.
The remote local government probably still makes a tidy markup, and the rural economy benefits greatly...

You will probably not choose to do it / choose not to do it if you could buy those goods locally at similar prices if you lived in that municipality, and if you weren't making significant income that would result in a perceived benefit to you...

The rest is simply accounting for the tax adjustments that produce the result of reducing your Taxable Income to account for your having already sent the Tax Payment to the Remote Municipality equivalent to Paying Tax in advance - like Yotei Nouzei, and a deduction for your Tax Donation to the Remote Municipality, so that your payment comes out of Pre-Tax Income instead of Post-Tax Income... (This is already written into the Tax Code for government, political, charitable, or certain other donations).
When you pay your Residents' Taxes, they are deducted from Pre-Tax Income, but your Furusato Nouzei was paid out of Post-Tax Income, so already subjected to your Marginal Rate of National Income Tax, for which you are entitled to a Tax Refund... Hence the deduction... You are simply getting the National Tax back that you paid on your Residents' Taxes...

At the end of the day, the Japanese government is actually making a profit by having you send your Residents' taxes, instead of having to pay additional subsidies to those remote Municipalities from the National Tax Coffers.

And your perceived benefit is the perceived discount on the products you received...

northSaver wrote: ↑Thu Mar 14, 2024 5:17 am My wife and I are of the same opinion. It's a terrible system and we never do it. We want to support our own town, the place we live and work, not some other town based on a cheap gift!

Only if you live in one of the Impoverished Municipalities with declining population and tax revenues...

Between Impoverished Municipalities, if someone from that municipality purchases something from your municipality, and you purchase something from their municipality, it nets out to zero...

But, the municipality gets a huge influx of funds from the residents of the Rich Metropolises that are awash with tax revenue and can afford to forego the small amount of revenue the Japanese who have migrated to the Rich Metropolises choose to send back to support their Furusato... (Foreigners are just lucky to also be able to benefit from the effect - hopefully the well-healed ones who can afford to send huge amounts of tax to the provinces...).

northSaver wrote: ↑Thu Mar 14, 2024 5:17 am

JimNasium wrote: ↑Thu Mar 14, 2024 3:58 am I was asking some friends and people I know about Furosato Nozei, and I was surprised the majority opinion was it’s a terrible, unfair system and should be done away with.

My wife and I are of the same opinion. It's a terrible system and we never do it. We want to support our own town, the place we live and work, not some other town based on a cheap gift!

I think it’s a terrible system but I pay more than enough tax here so happy to get some nice stuff back out. I do think it will be scrapped at some point though as it’s just an insanely stupid way doing things.

I don't buy the terrible system argument either.

Economically it's a voluntary government stimulus package.

As a tax payer, you get free quality domestic produce.
As a non major municipality, you get more tax revenue.
As a producer, you get a stable and significant source of demand that wouldn't otherwise be there.
As a platform, you get the platform fee.

Funded by the state and larger municipalities.

Whether you agree with government stimulus is another thing, but whether it's a net negative isn't a clear cut argument IMHO.

Tkydon wrote: ↑Thu Mar 14, 2024 7:02 am At the end of the day, the Japanese government is actually making a profit by having you send your Residents' taxes, instead of having to pay additional subsidies to those remote Municipalities from the National Tax Coffers.

Probably everyone skips your huge replies but this was a good point well made. It might even be more efficient making use of some market forces rather than being completely centrally planned. Quoted for visibility.

It depends on where you live I suppose. If I lived in Tokyo and knew that it was awash with tax money, then I'd be happy to send my tax to a rural area and get something nice in return. But since I live in rural Hokkaido I have a different opinion, and want to support my town as much as possible. It would be nice if the system were only available to residents of wealthy cities that had a lot of tax revenue. That would be win-win for everyone. But in its current state I'm against it.

adamu wrote: ↑Thu Mar 14, 2024 9:51 am I don't buy the terrible system argument either.

Economically it's a voluntary government stimulus package.

As a tax payer, you get free quality domestic produce.
As a non major municipality, you get more tax revenue.
As a producer, you get a stable and significant source of demand that wouldn't otherwise be there.
As a platform, you get the platform fee.

Funded by the state and larger municipalities.

Whether you agree with government stimulus is another thing, but whether it's a net negative isn't a clear cut argument IMHO.

Tkydon wrote: ↑Thu Mar 14, 2024 7:02 am At the end of the day, the Japanese government is actually making a profit by having you send your Residents' taxes, instead of having to pay additional subsidies to those remote Municipalities from the National Tax Coffers.

Probably everyone skips your huge replies but this was a good point well made. It might even be more efficient making use of some market forces rather than being completely centrally planned. Quoted for visibility.

The total tax take for the Japanese state is the same. But the municipalities have to ante up 30% of the monies remitted under Furusato for gifts. Plus they have to pay for staff to administer, tax returns get more complicated etc.

It’s a net loss to the Japanese state.

It isn’t like the Japanese Government is swimming in money to give away.

Would be much more efficient to scrap this scheme and direct tax take to where it is needed. Or cut taxes directly to avoid all this inefficiency deadweight loss.

Deep Blue wrote: ↑Thu Mar 14, 2024 10:37 am It’s a net loss to the Japanese state.

You're only considering the money, not the economy as a whole.

adamu wrote: ↑Thu Mar 14, 2024 10:51 am
You're only considering the money, not the economy as a whole.

The money could be spent directly stimulating the economy without all the inefficiencies of adminstering the furuzato nozei system, if this is the goal. But Japan has contrived to set up this bureaucratic system that must employ thousands of people doing a non-job instead of something productive. Japan has a shortage of workers in every industry, with 1.3 jobs for every applicant nationwide.

The logistics industry is particularly hard up, can't be helped much by millions of extra gift deliveries!

Much simplier to cut taxes directly and let us choose how to spend our money ourselves rather than jumping through hoops to get apples from Nagano or crabs from Hokkaido.... let's face it we can buy this stuff directly from farmers if we like.... or we can just get them in the local shops anyway.

Deep Blue wrote: ↑Thu Mar 14, 2024 11:03 am

adamu wrote: ↑Thu Mar 14, 2024 10:51 am
You're only considering the money, not the economy as a whole.

The money could be spent directly stimulating the economy without all the inefficiencies of administering the furuzato nozei system, if this is the goal. But Japan has contrived to set up this bureaucratic system that must employ thousands of people doing a non-job instead of something productive. Japan has a shortage of workers in every industry, with 1.3 jobs for every applicant nationwide.

The logistics industry is particularly hard up, can't be helped much by millions of extra gift deliveries!

Much simplier to cut taxes directly and let us choose how to spend our money ourselves rather than jumping through hoops to get apples from Nagano or crabs from Hokkaido.... let's face it we can buy this stuff directly from farmers if we like.... or we can just get them in the local shops anyway.

How is "directly stimulating the economy" in any way different than providing jobs for all the unemployed people in Hokkaido who get to benefit from the jobs created by the scheme ?
Some areas have a shortage of paying jobs or paying non-jobs, which is why many (younger) people leave those areas in search or real paying jobs or real paying non-jobs...
Maybe doing this tax administration stuff is better than standing waving a light sabre in front of roadworks

Maybe, the logistics industry in some areas is only able to survive through the business created by the scheme, and everyone in the area then benefits from the survival of the logistics industry in that area, so can be very much helped by the extra gift deliveries, or they would have to close down in those rural areas and lay off what workers they did employ, making it more difficult to get anything delivered...

The scheme allows the donor some discretion in directing their tax yen, and some incentive to make the effort...

Living in a rural backwater, I want my local tax to stay local, so don't participate in this. I can see the benefit of redistribution and economic stimulus, but it doesn't sit too well that huge companies like Rakuten, and now perhaps Amazon, are profiting from it.

northSaver wrote: ↑Thu Mar 14, 2024 10:21 am want to support my town as much as possible

Beaglehound wrote: ↑Thu Mar 14, 2024 11:56 am Living in a rural backwater, I want my local tax to stay loca

This makes sense. But here's another way to look at it:

The system *as a whole* results in a redistribution of taxes from the large cities to smaller ones (I'm assuming, don't actually have the figures).

You personally choosing not to participate is probably going to have little impact, compared to the incoming sales the city gets from people in Tokyo.

So you might as well maximise your own finances.

Regarding the platform fees. I wonder if there are is a Japanese equivalent to a FOI request. I really want to know how much the platforms charge, now.