'Hometown tax donations' to Fukushima hit record high in FY2021

Photo: A list of municipalities in Fukushima Prefecture and their "furusato nozei (hometown tax donation)" amounts in fiscal 2021, as well as goods given to donors in return.

The value of donations to Fukushima Prefecture's 59 cities, towns and villages under the "furusato nozei (hometown tax donation)" program reached an all-time high of about 5,252 million yen in fiscal 2021 to last March, a 1.2-fold increase from the previous year, according to preliminary data tallied by the prefectural government. Officials at the local government attributed the rise partly to fresh demand from donors for items given to them in return as a "gift" under the program as they spent much more time at home amid the coronavirus epidemic. Another factor cited was greater momentum toward supporting the post-disaster reconstruction of the prefecture and local industries. Under the circumstances, most municipal governments are trying harder to disseminate relevant information and expand their lineups of return items to donors to add independent revenue sources and finance projects to develop local communities more than before. Of the 59 municipalities, 42, or about 70%, saw donations increase from fiscal 2020 under the program. The prefecture says each of the municipal governments takes in about half the donated amount as its own revenue after deducting necessary expenses, including costs related to procuring return goods and clerical work. In the face of growing depopulation and shrinking tax revenue, municipalities typically use these donations to promote the agricultural, forestry and fishery industries, healthcare services, childrearing support and infrastructure improvement, among other appropriations. Fukushima city chalked up 1,247.53 million yen in fiscal 2021 hometown tax donations, about 1.5 times the previous year's level, becoming the prefecture's first municipality to exceed 1 billion yen. In April 2020, the city enhanced its system of providing relevant information by setting up a "city sales promotion office." It has since been making the most of a dedicated website that shows detailed information about, for instance, signature local products in its lineup of return items and how the city used the donations. The popularity of home delivery services for peaches, apples and other Fukushima-grown fruits as return products also contributed to the significant growth in donations. The town of Aizubange logged the fastest growth rate in donations among the Fukushima municipalities, registering a 5.4-fold jump. This was mainly attributable to the popularity of the "Yogibo" series of beaded sofas, which are produced at a plant in the town and joined its list of return items for donors in September last year. "Demand for these return goods expanded as people had more time spent staying home amid the COVID-19 epidemic," a town official said. The village of Kitashiobara received donations of 3.5 times the previous year's total. At the center of attention was a plan for a luxury hotel stay, which the village is offering in cooperation with a resort business operator in the Urabandai area. Donations to Futaba doubled even though the town offers no return items as the entire town remains designated as an area where residents should be evacuated due to the 2011 nuclear accident at Tokyo Electric Power Company Holdings Inc.'s Fukushima Daiichi plant. Officials of the town said donations increased from individuals, businesses and various organizations on the occasion of the 10th anniversary in 2021 of the disaster triggered by the Great East Japan Earthquake. On the other hand, 17 municipalities received fewer donations. Among them was Tomioka town, which saw a decrease following an unusually large-lot donation in fiscal 2020. Hirono town assumes reduced demand for rice, its main return item for donors, was the reason. In the past, some municipalities in Fukushima Prefecture experienced dips in tax revenue from their originally intended levels after residents there made donations to other municipalities by using the program. In such cases, the national government covers 75% of the revenue losses with tax grants to local governments. Municipalities in Fukushima are faced with a number of challenges, most notably depopulation and post-disaster reconstruction. An official of the prefectural government's municipal finance section said he hopes they will continue taking advantage of the tax donation program to help cope with their own issues. "We would like them to use the scheme as an opportunity to help resolve the local problems they face and increase the number of people who visit their communities by exploring regional resources and sending information about their attractions," the official said. Furusato nozei (hometown tax donation): A program under which people donate to prefectures or other municipalities they want to support. If a donation is made, an amount equivalent to the contribution minus 2,000 yen is deducted from income or resident tax for a given year. The program was launched in 2008 to help to revitalize regional economies. But fierce competition for donations ensued among local governments across the country, with a number of municipalities offering luxury or high-priced items meant to return to donors. In 2019, the central government switched to a new program based on three main criteria calling for return items to be limited to local products, procurement costs to be restricted to 30% or less of a donation amount, and donation-soliciting campaigns to be conducted in an appropriate manner. (Translated by Kyodo News)