The program was launched in 2008 as a way for a person to
make a charitable donation to a municipality or prefecture of their
choice—whether or not it was their hometown. Donors can even specify the
purpose for which they want the money to be used: educational projects and
helping the elderly are two examples. Beyond the feel-good aspect, though, there
are two benefits that make donating all the sweeter.
The first of these is that donations are tax deductible:
depending on how much you donate and your household’s income, you can claim
back almost the entire donation. In general, the more tax you pay, the more you
can claim back under donations to the Furusato Nozei program.
The other benefit… The municipalities and prefectures
often send back “thank you” gifts to donors, typically in the form of local
products and specialties. A tax break and return goodies into the
bargain—what’s not to like?
Power over the purse. Taxpayers in Japan decide how their
taxes are spent.
Yes that is right. Power over the purse, an authority
granted only to politicians, members of Congress( House of Representatives) and
local councils( I think) of municipalities, cities and provincial government.
Furusato Tax, as it is popular known in Japan, grants the
same power to tax payers. Essentially, it let tax payers decide how their taxes
will be spent. At the moment, it only covers a small percentage of ones income
tax and limited only to allocating the tax to local government units and or
villages.
It is done on an annual basis too. You can decided to
donate to a different local government unit next time around. The main purpose
of the program is to support development in the countrysides by channeling
taxes away from big cities like Tokyo. However, the program also make the
intended beneficiaries ( local government units) compete and be more
accountable. They would need to 'sell' to tax payers the projects they intend
to fund and explain how the money was spent.
As an added appeal to tax payers, local government units
who receive your taxes, lavish the donor with 'tokens' of gratitude from as
simple as a 'thank you' note to as enticing as a 2 kilograms of sirloin steak,
a paraglading tour, and many more.
Just this year, our family was gifted with a 700.00$
voucher that can be use on any MontBelle strore( Japan's largest outdoor
product company akin to NorthFace). Already, we've spent 200.00$ of that on a
very nice and lightweight down sleeping bag. Tomorrow, we are travelling to a
rural village next to the Japan Alps with a 2days/3nights paid for by the
village that received our tax donation. Power over the purse.
Who says democracy is limited only to casting ones
ballot?!
The second best tax policy is this type. But I think the
national central planners will hate this type of "power to the purse"
by the taxpayers. Remember they are so bright, so intelligent, they have so
many data, and they are backed by dozens of consultants with PhD, the foreign
aid agencies, so they can't be wrong, right?
The third best tax policy perhaps is status quo but
income tax will be as small as possible, like 5-10% flat rate.
Nonetheless, this "Furusato tax" would be one of the models in citizen empowerment.
-------------See also:
Tax Cut 24, Tax reform forum in Ateneo, March 26, 2016
Tax Cut 25, Presentation at Ateneo Ignite's Tax Exchange, June 04, 2016
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