Moral hazard with Furusato Nosei

[Tsumitate Wrestler]

Furosato Nozei helps farmers a lot and the small towns they live in. It helps for the first introduction to individuals who may not be aware of some small towns and their produce. You may buy again from this farmer and help him a second time.

Furosato Nozei also benefits the delivery companies who transport these products. The companies who run the Furosato Nozei sites of course profit from it. The tax pay receives a gift for helping the economy work.

I think this a good system because it helps many groups. I am pretty sure it will continue because it is helping the economy.

I appreciate you bringing a different perspective.

If the scheme was limited to places with a lower tax base I would be much happier.

They are making some changes slowly though, concerning advertisements and points, (From 2025-2026 it seems).

[eyeswideshut]

My biggest gripe about Furusato nozei is how much less generous it is now than it used to be. The heady days of 2015 when you could get 50%+ of your donation back in gift vouchers that could be exchanged for cash at a shady ticket shop at 98% face value are long gone and I am very sad about that.

If we want to have a real conversation about the moral hazard of tax minimization then the top of that list should be the "entertainment expenses" companies and sole proprietors can deduct here.

[Deep Blue]

Furosato Nozei helps farmers a lot and the small towns they live in. It helps for the first introduction to individuals who may not be aware of some small towns and their produce. You may buy again from this farmer and help him a second time.

Furosato Nozei also benefits the delivery companies who transport these products. The companies who run the Furosato Nozei sites of course profit from it. The tax pay receives a gift for helping the economy work.

I think this a good system because it helps many groups. I am pretty sure it will continue because it is helping the economy.

While I appreciate you are a beneficiary of this scheme (great grapes!) there are far more cost effective ways to support farmers and other small businesses. Ultimately the red tape and complexity of this scheme are deadweight costs to the Japanese economy.

[ChapInTokyo]

Does anyone else feel the Furusao nosei scheme is wrongly morally?

Basically, people are diverting local taxes to random places to get 'free gifts' such as alcohol. On the way Rakuten and other companies are creaming off tax money at the expense of local communities.

The beneficiaries of the schemes would be typically younger rich people. Older people might not be computer savvy enough to understand how to apply for the 'free stuff.'

I have never particpated. I prefer my tax money to benefit my community.

Yes. Couldn't agree more.

[Hanimal]

Yes. Couldn't agree more.

Thanks for your support!

[Moneymatters]

Yes. Couldn't agree more.

Thanks for your support!

My affluent ward (I once got a photo of the supermarket carpark with 5 mercs next to each other..)
Well. They seem to spend spare money to paint blue arrows to show bicycles how to cross busy intersections.
Unfortunately, a 40 year old that started to play Mario Kart in 1992 is now 73 and using an electric assist bicycle.
In their age addled state they are mistaking these arrows for the Mario Kart turbo boost pad.
Whilst assuming to see, it’s dangerous and not something I’d like to see more of my tax dollars wasted on!

Now. With wifi, bluetooth and other tech advances we could embed chips in the tarmac to sync between the traffic light and bicycles to override pedal assist and give them an actual boost on amber lights! I’ll submit a proposal for the next town hall…

Although.. If Gifu can promise me a pilot scheme next year I’ll buy my rice from them!

[Tkydon]

The name itself indicates the original motivation for establishing the scheme...

Furusato means old home town.
The original target for the scheme was the young worker who had moved from his Furusato to the Big City in search of economic opportunity, but who still wanted to support his Furusato, where his parents and family might still be residing, or to where he might return later in life.

The Scheme is operating on Residents' Taxes and not on National Taxes.
Big Cities / Prefectures have very large Resident's Tax Incomes, whilst the depopulated areas of the country do not.
You can transfer a portion (not all) of the Residents' Taxes you pay from your location of residence to those impoverished areas. The amount you are allowed to transfer (to receive the tax benefit) depends on the actual amount of Residents' Taxes you would pay, which in turn depends on your Total Taxable Income after Allowances and Deductions. (Of course, you can spend as much as you like, but that would not come with additional tax benefit.)

The impoverished areas are able to source local produce at very reasonable high volume wholesale prices, boosting income to local producers, and provide products and services (in the form of pre-negotiated gifts) to remote buyers at prices cheaper than they may have to pay where they live, cutting out the middle-men, and keep the difference as Tax Income to support the local community. I see that as a Win - Win - Win...

And on top of that, the National Government gives you a National Tax Deduction in the form of a Charitable Donation Deduction for your generosity in transferring some of your Residents' Taxes to those remote locations that really need support due to their dwindling working age populations, in support of their aging populations. Another Win - Win...

I see nothing immoral in that.


However, the term 'Moral Hazard' has an entirely different meaning than the way you used it.

[ChapInTokyo]

Yes. Couldn't agree more.

Thanks for your support!

Setagaya lost over 100 million yen of resident’s tax revenue in 2024 and the tax diversion is ballooning every year so it’s going to become so there’s less money available for rebuilding aging ward infrastructure such as schools as well as making it a real possibility that ward services such as garbage collection and street cleaning will become difficult to maintain in coming years.

‘区立の小中学校は、老朽化のため、令和18年度までに49校の改築が計画されていますが、建築資材の高騰などもあって、費用は1校当たり40億から50億にのぼり、計画の見直しを迫られた例もあるなど、減収による影響を受けているとしています。‘

小池都知事 ふるさと納税の抜本的見直しを国に求める姿勢示す
2024年11月15日
https://www3.nhk.or.jp/news/html/202411 ... 11000.html

Maybe people who pay their residence taxes should get preferential treatment for things like vaccines and use of public spaces since people getting Furusato gifts are to some degree free riding on the residence taxes paid by other residents.

I think that if people want to support their Furusato, they should simply donate without expecting stuff like crab or steaks or sake.

[sutebayashi]

Setagaya lost over 100 million yen

That number seems low actually, but what's their annual tax revenue?

Do the residents of Setagaya actually suffer without it?

Or is it money that is made better use of elsewhere?

My impression is these places have more money than they know what to do with.

[Deep Blue]

If there is a problem with the relative funding levels of municipal governments in Japan… (and I have no idea on this) then surely the better option is to reform the system so funding is allocated better?

Rather than have taxes randomly sprayed from municipality to municipality willy-nilly with no rhyme or reason, incurring a 30% direct loss and a further unknown cost associated with all the forms, paperwork and bureaucracy……. Fix the system so it works rather than this ludicrous Furusato Nozei scheme.

It isn’t as if the Japanese Government has an excess of taxpayer money to waste in the first place….