Almost 25% of small Japanese communities lost money due to hometown tax system

The website of the original tax of the Ministry of the Interior and Communication

TOKYO – A survey by Mainichi Shimbun of the revenues of 1,741 municipalities from Japan’s hometown tax system in fiscal year 2020 showed that, excluding Tokyo municipalities and cities designated by ordinance nationwide, 23% – some 394 municipalities – operated the system at a loss.

The ‘hometown tax donation’ system allows taxpayers to donate to local communities of their choice in exchange for a reduction in their own local tax account, and local communities that receive the donations offer gifts in return. The system is based on the idea of ​​revitalizing regional areas, but because communities compete for donations, contributions are concentrated in areas where donations are popular and the income of municipalities where many donors live decline. .

Based on documents released by the Ministry of the Interior and Communications in July, the revenues of each municipal government in fiscal year 2020 were collected by deducting lost tax revenues and expenses incurred to prepare the gifts. hometown tax and website management fees intermediary of the sums received. .

Across Japan, 471 municipal governments were in the red. Distributed by prefecture, six prefectures of the three large urban regions accounted for almost half: 57 in Tokyo, 47 in Saitama, 39 in Aichi, 30 in Osaka, 29 in Chiba and 20 in Kanagawa.

Even adding up the revenues of all municipalities, Tokyo came out with the largest deficit at 61.3 billion yen (about $ 539 million), while Kanagawa had a deficit of 27.1 billion yen (about 238 million yen). million), Osaka 16.5 billion yen (approx. $ 145 million), and Aichi 13.8 billion yen (approx. $ 121 million).

Among the 33 black prefectures, the prefecture that benefited the most was Hokkaido with a profit of 41.8 billion yen (about 368 million dollars), followed by Kagoshima at 19 billion yen (about 167 million dollars). and Miyazaki at 18.7 billion yen (about 165 million). Of the 179 municipalities of Hokkaido, only four were in the red.

Although the program appears to be more or less meeting its goals of reducing the financial gaps between cities and regional communities, the 20 most generous municipalities in Japan in fiscal year 2020 accounted for 20% of the monies paid out. Many municipalities across Japan operate the system at a loss, with only three prefectures having no municipalities in the red. Some 30% of the local communities that run the deficit system are villages and towns, which operate on a smaller scale than towns.

The national government covers 75% of the loss of residential tax revenue due to local tax if a municipal government is classified as an “allocation recipient” which obtains tax allowances for regional areas from the national government to support local government. income shortages. The classification of allocation and non-allocation beneficiaries is decided in the summer of the following year, but even if the same allocation and non-allocation rankings of the previous year and the amounts additional to revenue were applied, 267 municipalities are still in the red. Even excluding Tokyo municipalities and cities designated by ordinance, 201 municipalities would be in the red.

(Japanese original by Shunsuke Yamashita and Tomokazu Komaki, Tokyo Regional News Department)

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