by ANTHONY RAUSCH
Figure 6. A Shared Citizenship View of Furusato Nozei Taxes
Abstract
This article introduces the Japanese Furusato Nozei Tax System, whereby citizens can designate part of their tax burden to be transferred to as a financial contribution to a prefecture or municipality of their choice, thereby creating an alternative means of taxation. Given that the Furusato Nozei System is gaining widespread popularity, this paper investigates some of its inherent contradictions, its rationale, history and certain paradoxical features of this controversial tax system.
A front-page article in the February 20, 2017 morning edition of my local newspaper announced that the majority of the furusato nozei tax contributions that had been directed to prefectures and municipalities around Japan were to be allocated for education and childcare (see Figure 1). Originally envisioned as a way for individuals who had relocated from their hometowns to contribute financially to the economic health of their hometown, the furusato nozei tax system, a tax deducation/allocation system begun in 2008 whereby taxpayers from throughout Japan can direct their tax payments to the prefecture or municipality of their choice, seems to have become widely popular by 2016. This paper will examine the furusato nozei tax, illuminating its rationale, reality, controversies and implications. Part of any assessment of the system will rest on what one sees as the essential basis of a taxation system, whether that is fairness, response to social needs, or an orientation towards economic growth. Specific to the furusato nozei tax system as it stands now, questions can be asked as to the degree the system operates on the basis of personal consumption rather than shared citizenship, the implications of tax contributor influence on local policy, and whether the system prioritizes certain sectors of a local economy over others and puts local areas in competition with one another.
Furusato Nozei Tax, 2016: Designated Policies and Return Gifts
As detailed later in this paper, the 2016 furusato nozei tax data shows over 400,000 contributions for total tax deductions worth 22 billion yen and contributions worth over 24 billion yen. The article referred to above, carried in the Toonippo, the de facto Aomori prefectural newspaper, cited a fall 2016 Kyodo Tsushin survey of 1788 governing bodies from throughout Japan, including prefectures, municipalities and the 23 Tokyo wards. According to recent rule additions associated with the furusato nozei system, contributors, in addition to selecting a ‘place’ (prefecture or municipality) to which to direct part of their tax payments, can in some cases indicate policy areas to which they would like their contributions to be applied. According to the results of the Kyodo survey, and presumably at the request of contributors, 12 percent of such designated furusato nozei tax contributions nationally were to be allocated toward education, with 11 percent to be allocated to child support services. Six percent were to be allocated for two areas: regional and industrial recovery was one and town making and citizen activities the other. Health, medical and welfare services was to have garnered five percent, tourism and exchange activities four percent, and the local environment and sports/cultural activities three percent each.
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