In September of this year, The Japan Times reported that Kyoto, previously one of Japan’s top tourism destinations, was facing bankruptcy. The ancient capital witnessed a drop of 88 percent in inbound tourism in 2020, with hotel reservations dropping a whopping 60 percent. Domestic tourism also took a hit, with school trips across the country being canceled due to skyrocketing Covid-19 cases and citizens refraining from inter-prefectural travel.
If Kyoto, the city home to the Golden Pavilion and Kiyomizu Temple, suffered from the pandemic, you can imagine the detrimental effect it has had on the financial state of rural areas. This year, consider making a difference by donating to municipalities across the country for a chance to save the Japanese countryside – and you can do it by enrolling in the hometown tax program.
What is the hometown tax?
The hometown tax program (or furusato nozei in Japanese) was first announced by former PM Yoshihide Suga in 2007 (when he held the post of Minister of Internal Affairs and Communications) as a way to fight the deterioration of rural Japan. The program encourages city dwellers to donate to independent producers around the country in exchange for a credit on their income and resident taxes. From premium meat and cheese to pottery and other artisanal goods, taxpayers can “purchase” goods from just about anywhere in Japan.
With rural-to-urban migration growing, fewer younger citizens are paying taxes in their hometowns, leaving many municipalities with little funds to keep themselves afloat. Because taxpayers can choose which jurisdiction their donation will go to, they can have a direct impact on the revitalization of rural Japan.
The perks of donating
Goods available via the hometown tax program are often items or curated packages of items that would be difficult to find in big cities without ordering from farmers directly. There are, however, three additional perks to enrolling.
Firstly, goods are always packed with care and taxpayers receive heartfelt gratitude from local farmers and producers. Enrollment in the scheme is also a positive way to discover independent labels you might like to continue supporting in the future.
Secondly, there is a tax deduction. Each donation comes with a deduction from residence and income taxes. In other words, you can receive premium items in exchange for a small portion of your tax money, which makes it all the more worth it.
Finally, choose which areas to help with your money. Paying your taxes is, well, not the best part of adulting, and it’s rare to see exactly how they are spent by municipalities and governments. By donating directly to the jurisdictions of your choice, you can see the direct impact of your contributions. For Japanese residents, it’s often a way to give back to their hometowns while still living in Tokyo, Osaka or other metropolitan areas. For international residents, it’s a chance to discover the country without leaving your house.
How to get started
There are a couple of websites through which taxpayers can donate, but Furusato Choice is one of the top options and one with the simplest donation procedure.
On the Furusato Choice website, you can choose from two plans: Recurring and one-time. Choosing the recurring plan allows you to have zero limits on how many times you can donate and to how many jurisdictions. The one-time plan is best for taxpayers wanting to donate no more than five times.
How do you choose your plan? That is up to you and whether you can find some benefits in ordering from the same jurisdiction every year. For example, you might enjoy delicious Hokkaido crab delivered to your doorstep every winter. However, it is crucial that before taking another step further that you check how much you can donate.
The amount taxpayers can donate varies, depending on how much residence and income taxes they paid that year. Furusato Choice has an easy-to-use calculator to help with that. All you need is how much residence and income taxes you will pay in 2021 (or a general estimate).
One more thing to keep in mind is deadlines. While you can donate at any time within the fiscal year, it might be smart to note the date you must submit the tax deduction slips. For recurring donations, Furusato Choice recommends filing your donations by mid-March of the following year. One-time donations have a tighter deadline; it is recommended to file your donations by January 10 of the following year.
Finally, it should be mentioned that ordering from local producers via the Furusato Choice website isn’t like ordering from other online shops. Certain packages can take a few months to be shipped, especially if you are donating to producers of particularly seasonal items.
1. Use the Furusato Choice calculator to see how much you can donate. To do this, refer to your payslips or invoices if you are a freelancer, and calculate how much residence and income tax you’ve paid in 2021 so far.
2. Browse the Furusato Choice online catalog and select your favorite items from the jurisdictions to which you’d like to donate.
3. Receive your package in the mail.
4. Receive your donation confirmation slip and process. This step is super important. Without processing the donation confirmation slip, you will lose your right to the tax deduction. If you are a company employee, check with your HR representative on how you can apply for the deduction.
Get started at www.furusato-tax.jp