Hometown Tax (ふるさと納税, furusato nōzei) is a system in Japan that allows taxpayers who live in urban areas to contribute to rural areas in return for a credit from income tax and residence tax. It was created by Yoshihide Suga in 2007. On July 5, 2014, Suga's chief cabinet secretary announced that they had established the preparatory office for the “local headquarters”.
The local headquarters was established in order to help increase the number of children, especially in rural areas, and to promote development of self-governing bodies. Promoting “hometown tax” is included in these activities.
Hometown tax Wikipedia
In the spring of 2008 the "Hometown tax" law was legislated in Japan.
Taxpayers who contribute more than 2000 yen can have their income tax and residence tax reduced. The amount deducted is the taxpayer's entire contribution minus 2000 yen and set amount. To receive the subtraction, the taxpayer files a final tax return. Many young people move to urban areas leaving too few people to pay rural taxes. Taxpayers choose the receiving jurisdiction.
Cities that offered "gifts" of local products received up to 60 million yen.
The use of gifts has been criticized as distorting the results.
Cities that have no specialty products or have no means to announce their activity received fewer contributions.
InYamagata Prefecture contributions have been increasing. For example, Obanazawa city and Mogami town received several million yen in 2013.They use gifts and the Internet to collect contributions. For example, Obanazawa, Yamagata offered gifts of “Obanazawa watermelon” and “sirloin steak of Obanazawa-gyū”.