Japan’s Furusato Nozei Tax Program

Neoliberal Policy or Hometown Sentiment?

Anthony Rausch, Hirosaki University [About | Email]

Volume 19, Issue 3 (Article 6 in 2019). First published in ejcjs on 24 December 2019.


This paper examines the Furusato Nozei tax program, an increasingly popular option for Japanese taxpayers. After outlining Japanese taxation and the operational reality of Furusato Nozei, or Hometown Tax program, the paper critically examines two fundamental elements implicit in this alternative approach to taxation, first in its neoliberal orientation toward a policy objective of regional revitalisation, wherein taxpayers determine the support level and contribution recipient, and second in its furusato, or hometown, consciousness, as the presumed motivational component for taxpayer participation in this optional program. The paper assesses these two influences, concluding that each are suspect, both in origin and justification in the policy promulgation and in the outcome of the policy in reality. First, while the intent of Furusato Nozei undercuts centralised control of tax revenue re-distribution, the fiscal outcome of the program is in many cases yielding the opposite of its objective, calling into question neoliberalism as a national-level approach to regional revitalisation. Second, taxpayer participation in the program is largely based on the return gift provided by the municipality that receives the contribution, calling into question the basis of a ‘hometown consciousness’ assumed to be the motivating factor for taxpayer participation.

Keywords: Taxation, furusato, gift giving, rural decline


The most common questions that arise regarding Japan’s Furusato Nozei tax system, now in its tenth year, have to do with its uniqueness to Japan versus its potential universality and alterability: “Is this some only-in-Japan thing?” “Has a tax system like this ever been tried anywhere else?” “Could it work anywhere?” The default response is to point out that, as Carrico (2013) noted, a tax system is a social construct, “a man-made and thus alterable institution” (16), which can be altered to match circumstances, priorities and goals. However, to respond to such questions as the uniqueness (versus commonality), the universality (versus particularity), and the alterability (versus immutability) of this option within the overall Japanese tax system more completely, this paper will consider the origins, justifications, and operational reality of the Furusato Nozei tax payment program against both Japanese political decision-making and the background and grounding of Japanese culture and society. The working assumption of this paper is that furusato nozei is an uneasy, if not contradictory amalgamation of two potent forces at work in contemporary Japan: emerging neoliberalism in national policy-making and the power of furusato, or homeplace in citizen consciousness—the former which would appear to explain the ‘why’ of the tax program and the latter the ‘how.’ After outlining the background on Japanese taxation and the operational reality of the Furusato Nozei tax program, the main argument of the paper will focus on considerations of contemporary neoliberalism in Japanese policy-making followed by an examination of the background and motivational power of furusato in Japanese culture and discourse so as to be able to conclude the degree to which the Furusato Nozeitax program is a function of these two constructs in their Japanese context and orientation.

Japan’s Current Taxation Dilemma

Japan has the world’s third largest economy, supported by a post-Second World War democratic political system, fiscal discipline and budget restraint, high educational standards, generous social welfare programs, and, for most of the post-war period, leading global corporations. While Japan’s progressive tax policies had yielded a highly egalitarian society on one side, the Japanese ‘strong state’ had provided for a generous welfare system on the other, and in the 1980s, the Japanese model, both economic and social, was the envy of much of the developed world. That said, Ide and Steinmo (2009) noted that a decade of poor economic performance in the 1990s resulted in problematic budgets at all levels of government and widespread economic angst among politicians, bureaucrats, and ordinary citizens. Despite the clear need to raise taxes, they also asserted that the central government’s response to the fiscal woes of the country undermined citizens’ confidence in government solutions, resulting in deep skepticism toward arguments the government offered in favour of tax increases.

The Japanese tax system was established during the war years of the early 1940s, where the government instituted a revenue structure that concentrated revenues in the central government. Post-war, income taxes were highly progressive, with a pay-as-you-earn system that was based on the principle of ability to pay (Steinmo 1993). The main pillars of the tax system were progressive income and corporate profits taxes, along with social insurance charges, property taxes, and product tariffs and excise taxes. However, with the burst of the bubble economy in the early 1990s, the Japan government was forced to confront a severe taxation-related dilemma. It appeared that while taxpayers were willing to accept tax increases for expansion of welfare expenditures, they refused the same for any policies aiming at fiscal reconstruction. This sentiment, reified in policy, meant that budget redistributions from the centralised finance agency of the central government to local governments—the Japanese Local Allocation Tax disbursements—were decisively weakened.

Looking more closely at the specific tax dilemma facing Japan, Kimura (2015, 18) outlines the current Japanese local tax system as based primarily on local revenue, in the form of local taxes (35%), along with the Local Allocation Tax (18%) and a local transfer tax (2.3%). Local taxes are comprised of prefectural and municipal inhabitant taxes, fixed asset taxes and other special purpose taxes. The Local Allocation Tax, which is an allocation of financial resources made by the national government to each local body in order to equalise local revenue sources by reducing disparities and guaranteeing the systematic management of local finances, is of particular interest. The Local Allocation Tax for each municipality is calculated using a formula that accounts for standard fiscal requirements and standard financial revenues and, as Kimura outlines, the Local Allocation Tax scheme is highly advantageous to those local bodies whose financial base is weak. However, despite the remarkable gap between the concentration of revenue generated through the central government and the high levels of expenditure at local government levels through the LAT, the Japanese tax and finance system remains highly centralised, with a considerable amount of decision-making authority remaining with the central units (Mochida 2001). Another factor influencing taxation in Japan is that, despite the fact that local resident taxes are fairly uniform across the country, local business taxes are highly concentrated in urban areas. Due to the respective ratios in local taxes between tax on income, tax on property, and tax on goods, local tax revenue is strongly sensitive to income tax levels, which is to say, strongly affected by the local taxes levied on income, a tax category that is both very sensitive, as well as responsive, to trends in the overall economic situation. This means that while tax revenue generated in urban areas is fairly stable, the levels of tax revenue generated in outlying areas is volatile. A final characteristic is the opaque overlap between national taxes and local taxes, which means that individual taxpayers have difficulty in determining how much tax they are paying to the central government (Mochida 2006, 161). The view of Japanese taxation this portrays is high centralisation, high opacity, and a concentration on urban centres with high sensitivity in rural areas.

The conclusion outlined by Ide and Steinmo (2009) on the ‘end of Japan’s strong state’ noted the contradiction that was being worked out in Japan: while progressive taxation and fiscal equality were the glue that had held the Japanese social system together, the dynamics of globalisation and its effects on the Japanese economy together with citizen’s aversion to increased taxes for fiscal reforms meant that neoliberal approaches to governing, and taxation, were both attractive to the ruling government and increasingly likely. It was out of this progression toward policies of neoliberalism that, for example, the Heisei municipal mergers of the early 2000s (see Rausch 2014) emerged to address local-area administrative restructuring, and with calls for regional and local revitalisation, the Furusato Nozei tax system now under review in this paper.

Furusato Nozei Tax: What is It?

The Furusato Nozei Program, or Hometown Tax Donation Program, is a tax incentive scheme established by the Japanese government to generate and support the economic vitalisation of small and under-funded municipalities. Under the system, taxpayers can choose to donate to a municipality or prefecture of their choice, and in some cases a specific policy area of that local body that they want to support as well, such as social and environmental programs and aid in times of disaster. In return, they are exempted from a portion of their income and resident taxes. The provisions of the furusato nozei tax are set out in Section 37 of the Regional Tax Law and were promulgated in the spring of 2008. The specifics of the law allow an individual to contribute up to 20% of taxes owed to Furusato Nozei program contributions, with the tax deduction then being the amount over ¥2,000. For example,if an individual makes a Furusato Nozei contribution of ¥30,000, the Furusato Nozei formula would allow ¥28,000 to be deducted from the final tax burden.1 The program also allows for return gifts, ideally local products, to be offered by the receiving municipality as incentives. As a national-level program, competition for contributions is fierce, and local governments use return gifts such as locally-produced beef, melons, sake, and other premium and highly-desirable local specialties delivered to contributors as an incentive/token of appreciation for contributions. The Furusato Nozei Tax Program is controlled administratively by the Japanese Ministry of Internal Affairs and Communications, but operationally managed largely by several major private website managers that coordinate the information from the municipalities with an easy online contribution system.2

As outlined by Nishikawa (n.d.), this reform to the tax system was advocated by local governments as a device meant to provide a tangible route for Japanese citizens to show their commitment to their hometown place, their furusato. As governor of an outlying and highly rural prefecture, Nishikawa was clearly aware of the fiscal dynamics that arose when local administrators had no way to ‘recover’ the costs incurred for residents who, having received administrative and social services while growing up, had subsequently left for education, and ultimately work opportunities in urban areas. Local administrators thus had no means by which to continue to raise the necessary monies to invest in the necessary social infrastructure in their local areas. Nishikawa also surmised that there would be people who, having left their hometown and moved to a large city, found themselves with no way to give back to the community that raised them if they were so inclined. Furusato Nozei provides a system to address both of these tensions, one related to fiscal governance and the other based in individual emotional attachment. Further, and at a broader social scale, as it is based on tax payments, and many people have now left their hometowns and live in urban areas, Furusato Nozei offers a way to reshape the fiscal relationship between large metropolitan areas and rural Japan.

The program has grown in both number of participants and the scale of contributions. The year-by-year increase in Furusato Nozei tax contributions is shown in Table 1.

Table 1: Furusato Nozei Trends



Contributed Amount (yen)


































Source: Ministry of Internal Affairs and Communication,


Over the ten-year history of the tax program, two trends have emerged. First of all, a general increase in both participants and contributions was the early pattern, with dramatic increases from 2013 to 2015, attributable to changes in the rules allowing higher deductions and more aggressive marketing for the program. In addition, a Japan for Sustainability article pointed out that the system began attracting attention as a means of supporting disaster-affected areas (Niitsu, 2016), with over 1.4 billion yen (approximately USD13.3 million) as of fall 2016 donated for relief activities in an earthquake-affected area of southern Japan. The article noted that reward gifts are generally not offered to those opting to donate to disaster-hit areas and that many of those donating to the disaster above declined when gifts were offered.

There have emerged several problematic issues. The first concerned the fact that the reward gifts were becoming too expensive relative to the donation amount. The sophistication of the commercial Websites that promote the system and aid contributors highlight premium gifts by those areas that either have highly attractive local resources or use attractive gifts that do not originate in the region. Clearly, such practices advantaged areas with attractive resources such as high-priced beef or local seafoods, as well those who were able to contract with corporations to provide non-local items as gifts. In response to the competitive nature of this system, the return gifts came, in some cases, to constitute well over half the value of the donation. The national government has since reformed the rules of the system to bring the gift practices more in line with the intent of the system (Japan Times 2019).

A second area of concern is the rising inequalities that the system has brought. The shifting of tax revenues has meant that some local governments are recording deficits while others are enjoying surpluses, regardless of their original fiscal status, geographic location, or governance needs. The data have revealed that urban areas are usually those with the deficits, as local tax obligations are shifted to outlying areas, in exchange for the reduced tax burden together with the return gift. The deficits have in some cases reached levels of hundreds of millions of yen (300 million to 600 million (USD 2.8 million to 5.7 million) for Setagaya Ward of Tokyo). Moreover, discrepancies of use are emerging at an individual level as well, as higher-income earners are able to reduce their obligation through donation, sometimes to multiple locales, while also enjoying the return gifts (Nohara 2017).

Furusato Nozei Tax as Regional Revitalisation: Neoliberalism as a Policy Objective

Views of Japan in the West have ranged across highly divergent images: regional aggressor, Asian exotic, economic powerhouse, and more recently, bankrupt welfare state, and finally neoliberal policy state. The 1990s saw the collapse of the so-called ‘Bubble Economy,’ and with it much of Japan’s perceived economic invincibility, contributing to an image of Japan as a nation lost and adrift. Allison’s (2013) Precarious Japan chronicles the outcome of this historical chapter for contemporary Japan, particularly in terms of the economic and social disruptions that have occurred in the past two decades, setting the context for understanding Japan’s struggle with its recent neoliberal policy trajectory. The focus in this section is thus on this trajectory of neoliberalism in Japan and an understanding of how this approach to governance came to yield furusato nozei tax as regional revitalisation policy.

As Monbiot (2016) outlined in an article in the Guardian, while neoliberalism has gone through continual revisions since its conceptual coining in 1938 and before being put into practice by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States of America in the 1980s, the term has become so pervasive that we seldom recognise it as a specific political or policy ideology; its anonymity is both a cause and a symptom of its ubiquity and power. He, however, characterises its essential point in a market philosophy as follows:

Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.

He notes that, while we often don’t identify neoliberalism by name, it has over the past thirty years become such a major, yet unquestioned strand in the broader weave of public policy that few question either its place in policy-making or its influence in broader society.

Writing a history of Japanese politics, Murphy (2014) rejects any pretense of neoliberalism in Japanese governance, by disconnecting political policy-making from a market philosophy: “Japan is about as far as one can get from the neoliberal fantasy of a market society from which politics and power have disappeared. The political is everywhere in Japan, hobbling and constraining markets, permeating all aspects of life” (267). What many viewed as a turn toward neoliberalism by then-Prime Minister Koizumi Jun’ichirō in the early 2000s was, according to Murphy, really a means of restoring sound financial practices to what he refers to as Japan’s “almost entirely rudderless” policy coherence (269) by ‘privatising’ the national postal savings system. According to this thinking, this round of privatisation paved the way for reducing the deficit spending that had become increasingly important to financing public works after the collapse of Japan’s economic bubble in the 1990s. Murphy explained that the main objective of post-war high economic growth policy was to control competition so as to foster fledging industry on both national and international scales. Policy positioned bureaucracy to work with national-level economic organisations to maintain a status quo that ensured economic survival for all. However, by the 1970s and 1980s, and in spite of its mature economy, Japan was increasingly using its policy tools less to promote winners in areas of adaptation and innovation than to shield losers from competition at home and abroad, problematic, as Katz (1998) warned, noting that, when confronted by years of economic malaise, Japan in the 1990s was still mired in its early post-war bureacratism—the structures, policies, and mental habits of the 1950s and 1960s.

Others disagree with Murphy’s rejection of the term, recognising neoliberalism in Japanese policy, but theorising its origins at different points in time and positioning it either as a cause or a result. Hashimoto (n.d.) represents the former question by identifying two possible starting points for neoliberalism in Japan, the difference explained by contrasting views of what constitutes the most important characteristics of neoliberalism. One view holds that neoliberalism appeared in Japan as early as the mid-1970s in the form of a combined government-industry suppression of a labour movement in 1975 (Hyodo 2010). Shibata’s (2015) argument positioning neoliberalism as cause reflects this early-start view, with this early form of neoliberalist suppression yielding Murphy’s rudderless policy, holding that the subsequent absence of coordination between the institutions of governance and the policies they crafted represented a dysfunctionality that arose from neoliberalist governing trends that emerged in the early 1980s. The other view cited by Hashimoto meshes with most other views of neoliberalism in Japan, with its origin in the decade from the mid 1990s onward as a result of rudderless policy, in Koizumi’s structural Trinity Reforms (Mukawa 2009). Tsukamoto (2012, 2016) ties this period of neoliberalism-as-result to state rescaling in post 2000s Japan, which brings neoliberalism to this discussion of furusato nozei tax. Tsukamoto’s (2012) argument puts Koizumi’s reforms as a turning point toward decentralisation and deregulation on one side of policy debates, along with the abandonment of balanced national development, which had been premised on post-Second-World-War Japanese Development State regulations on the other:

the Koizumi administration accepted spatially uneven development in order to cut back redistributional spending and restore Japan’s debt-laden public finance. The current Liberal Democratic Party administration has been adding local competition, arguing that it is an essential part of national economic revitalisation efforts… In summary, Japan is moving toward a decentralised political system that adopts neoliberalist ideas while keeping core Japanese Development State traits (Tsukamoto 2012, 72).

This focus on spatial restructuring is at the crux of this turn toward a uniquely Japanese form of neoliberalism and instrumental in making the regulatory shift from a distributional approach in macro-economic management to a competitive approach to local economic development, which set the stage and led to a response in the Furusato Nozei tax program. By rescaling through denationalisation of state finance sources, neoliberal leaders are able to replace state re-distributional programs with market discipline despite its resulting uneven local development (Swyngedouw 1997, Brenner 2004). Up until the Koizumi reforms, Japan’s underlying governing principles focused on centralised state planning and equal distribution, with no interest in market-rational individualism (Hill and Fujita 2000, Ohtake 1999). The Koizumi reforms consisted of reductions in central-government subsidy grants, cutbacks in funding for local government equalisation aims and transfers of tax resourcing privileged to local governments. These measures were most directly responsible for widening the urban-rural gap from fiscal year 2005, which Tsukamoto concludes represents a neoliberalisation of the Japanese Development State (Tsukamoto 2012, 78-79). Adopting the dimensions that Brenner et al. (2003) posit as measurement criteria for assessing neoliberalisation—(1) institutional and structural forms, (2) policy-making and regulatory interventions, and (3) the epistemological, ontological, and ideological forms found in representation—Tsukamoto highlights what he terms ‘the Tokyo-oriented Reformed State’ in state space dimensions—those that refer to institutional and structural forms through the operational political apparatus—as decentralised, reformed to small government, employing local-to-local competition and acceptance of unevenness as a result of the introduction of market principles.

Thus, this view of the Furusato Nozei tax program is that it originated and now operates in response to this broader neoliberal project, as the tax component in the devolution and privatisation of centralised policy making together with a selective rescaling of development under market directives, and that it clearly envisions, if not actually realises, a transfer of tax money from populated urban areas to less populated rural areas under the guise of justified and policy-based regional revitalisation that is guided by the visible preferences of tax-paying consumers.

Furusato Nozei Tax as Citizen Consciousness: Furusato as a Motivational Construct

At the basis of the Furusato Nozei option is, obviously, the notion of furusato. As a Japanese construct of cultural consciousness, furusato can claim a rich and extensive literature to draw from; what follows draws from a comprehensive academic examination by Robertson (1988) and a more recent exposition offered by Morrison (2013). Furusato literally means “old village,” but its meaning equivalent would be more like “home,” “hometown,” or “native place.” As a landscape, furusato conjures images of an idyllic countryside of forested mountains, rice fields, and a cluster of thatch-roofed farmhouses. However, it is now a powerful symbol widely used by politicians, planners, and advertisers. Robertson (1988) suggested that the evocation of furusato is “motivated by a nostalgia for nostalgia, a state of being provoked by a dissatisfaction with the present on the grounds of a remembered, or imagined past plenitude” (495).

Furusato implies both temporal and spatial dimensions: temporal represented by the inherent notion of furu(i), or old, and spatial by virtue of the connection with a place in the countryside. However, both of these components are highly complex. Morrison (2013) points out that furusato indicates a place from the past—if a person lives in his or her place of birth, that place would not be referred to as a furusato. A home can only be referred to as furusato after it has been left. That said, furusato also conjures up a sense of an individual’s future, the assumption being that furusato is both the starting point and the terminus of one’s life. Morrison also points out, citing Narita (2000), that “if a person’s hometown or birthplace does not generate warm fuzzy feelings, that person might feel reluctant to call that place his or her furusato,” adding that virtually any place that does evoke such feelings of nostalgia, even if they are not one’s hometown, may be considered and called furusato.

This definitional shifting of furusato from time and place to something more individually selective that Narita pointed to was referred to by Robertson (1988) as well. She reported on essays published in a national newspaper in 1984 in which Japanese individuals articulated their sense of the word. The accounts include a middle-aged woman who distinguished between the household furusato, as in her husband’s natal household, and her own furusato, which includes all of the places she had lived as the family moved from place to place due to her husband’s job. Conversely, an elderly man insisted that ‘motherly love’ and a ‘local dialect’ were necessary for feelings of furusato about a place. A third essayist identified furusato as that which had been crushed by urbanisation of the countryside, citing specifically the concrete highways that had been built in the area. The final of the four essays was offered by a civil servant who wondered if furusato could be something rebuilt through local government activities referred to as furusato-zukuri, or home- or native-place-making, before concluding with doubt. The compendium of components in these essays that Robertson identifies are nostalgia, pleasant scenery, local dialect, compassion, camaraderie, motherly love, and enriching lifestyle, to which Morrison (2013), based on a similarly extensive reading of interpretations by Japanese respondents, adds love, dependence, warmth, and protection—a healing oasis set apart from the cold, crowded, and impersonal city.

Following on this transition, if not expansion, from temporal and spatial to emotional and psychological, Morrison describes at length the process for how furusato came to encapsulate a feeling, rather than simply referring to an actual place. The simple explanation is modernisation, through which furusato shifted from signifying the concrete birthplace of an individual to symbolising the home of the heart—a place accessible to each and every Japanese individual. Analysing this more deeply, Morrison outlines three factors in the origin and development of the current notion of furusato. First, there was the mass migration from the countryside to urban areas in the first half of the 20th century, which shifted the spatial point of reference from the city, where most people now were, to the furusato, which they had both physically and psychologically left behind. Second was the “discovery” of the Japanese landscape, which demanded, as theorised by Karatani (1993), that there be a break between the observer and the observed, such that the landscape can be seen as something to be depicted objectively and realistically. Karatani noted that pre-modern Japanese poets viewed the physical landscape as a reflection of their inner selves, placing them in the landscape rather than something apart from it. Recognition of this rural landscape only became possible after people had left it and become separated from it. Morrison also points to the maintenance, if not persistence of the consciousness of furusato through educational practices that contributed to the development of the modern Japanese nation-state. Morrison points to a genre of songs, the shoka, that have long constituted a central part of music education in Japan, and which have gradually assumed a role as “the home of the Japanese heart” (Watanabe 2010, 38). As Morrison points out, what is notable about these songs is that there are no references to an actual town or place, such that over time students come to transfer the memories of their own home-place, rural or not, onto the universal imagery presented in the songs. Morrison concludes that there are now few concepts in modern Japan that carry the ideological and emotional weight that comes with furusato. She concludes that, by mapping the trend of furusato, one can conclude that the images offered through it have become increasingly abstract, growing further from the external referent of the countryside. Along with this, Morrison notes that furusato has shifted from the realm of the individual to that of the collective, and from a representation of localism to an emblem of the national. With this, furusato no longer ‘belongs’ to a select few who have actually left their home-place; it is now in the possession, if not the consciousness, of every Japanese, regardless of where they came from, where they live and, indeed, the strength of their connection to any place at all.

The question under consideration herein is whether such feelings of furusato—constructed rather than attributed, universal rather than individual, modern more than traditional—are sufficient both in the justification for a tax deduction based on a furusato nozei contribution to a place that is not one’s actual hometown and in explanation for why Japanese taxpayers would participate in such a tax re-distribution program. What this requires on the policy side is a continuation of this transition from physical place to universal emotional construct to the point where furusato has now emerged in concrete government policy. This is not the first time such a transition for furusato has been undertaken by the Japanese government. Robertson (1988) reports on the furusato-zukuri, a policy of home or native-place-making, that was adopted in 1984 by the then ruling Liberal Democratic Party (LDP) as an “affective cornerstone of domestic cultural policy” (504). The policy, referred to as Proposal for Furusato Japan, was regarded as a means of forging a new cultural policy and a new Japanese-style welfare state. It represented an attempt to shift policy orientation toward the creation of a politically symbolic landscape of nostalgia and a reorientation of domestic policy from a preoccupation with material needs to a focus on affective dimensions of national and civic life. Robertson concluded her paper by noting that furusato-zukuri was at the time employed as a synonym for ‘cultural administration,’ representing an administration effort at a culturisation of Japan, as an effort toward a more warm and humane Japanese society. Fast-forward to the 2008 and beyond, and furusato is now employed as a means of generating citizen support for areas that continually experience fiscal shortfalls, but with the caveat of a contribution gift offered in return for that furusato support.

Critiquing Furusato Nozei: Neoliberal Policy and Hometown Sentiments

When viewing and reviewing policy, Campbell (2002) advised to differentiate between origins and influences in policy making and the emergent policies and concrete outcomes that result. As a means to assessing the former, he cited two approaches, one in Hall’s (1989) ‘viability perspective,’ which holds that new policy must be economically viable in terms of consistency with existing economic structures, administratively viable in that they are ‘possible’ given the existing set of state administrative capacities, and politically viable insofar as they do not threaten key interest groups on one hand while also providing for building key coalitions on the other. The other approach was Goldstein’s (1993) four-stage ‘process view:’ delegitimisation of old policy; entrepreneurial search for new policy, implementation and reality-testing of the new policy; and institutionalisation through legal mechanisms into formal government organisations.

The Furusato Nozei tax program was established in 2008 in part to offer ex-residents a means to contribute to their hometown and in part to solve the economic woes of Japan’s rural areas. This policy aimed to achieve these objectives by allowing for individuals to direct a portion of their tax burden to the prefecture or municipality of their choice in exchange for a deduction in their tax burden and the promise of a ‘gift’ from the recipient of their ‘contribution.’ For the ex-residents of a small municipality in rural Japan who have moved to a larger urban area, Furusato Nozei represents a way to give back, directly and financially, to their homeplace. In terms of the second aim, addressing Japan’s rural crisis, this would, in theory, require impoverished locales throughout rural Japan to be reimagined by non-ex-residents as their very own furusato, thereby garnering the financial support of taxpayers at large making individual contributions to their support. This individual effort to support the furusato of one’s choosing would in part replace the central government’s role in redistributing tax revenues through the Local Allocation Tax formula and allow for local areas to ‘compete’ for these contributions. This ‘competition’ manifests itself in the form of return gifts offered to contributors; some contend that these return gifts, when based in the economy of the locale as they should be, also yield economic revitalisation benefits through this increased local economic activity. Applying the criteria Campbell introduces and outlines, the Furusato Nozei tax program fit with the neoliberal orientation of the ruling Liberal Democratic Party at the time of its conception, which is to say the progenitors and successors of Koizumi’s original neoliberal reforms. It is viable economically (in that it relies on the citizen’s obligation to pay taxes), politically (for the dominant political forces in Japan), and administratively (if not advantageous in that parts of it can be outsourced to private venders). It roughly follows the process of policy making in that it ‘offers an alternative’ to the ‘old way of paying taxes,’ it has been implemented and its reality testing has generated necessary and legitimate reforms, and it is well on its way to becoming institutionalised as the new way to pay taxes in Japan, with magazines and television commercials pushing its attractiveness. A publication by the Nippon Institute for Research Advancement (NIRA) in early 2018 reveals how ‘institutionalised’ the Furusato Nozei tax program has become, as six academic and government leaders expound on the merits of the program and point the way for improvements in the future. Among the themes offered: the program’s potential and promise in reconnecting the country and the city; the commonsense human connection that is inherent in the contribution and thank-you-gift between contributor and community; the increased effectiveness of the program with reforms that will bring such tax incentives to urban areas as well rural; the potential for further tailoring the program to match peoples’ lifestyles in the form of new and innovative return gifts; in finding ways of increasing repeater participants.

However, substantive questions about both the program’s neoliberalist orientation and its furusato consciousness may be raised. First of all, in terms of the ‘successes’ of neoliberalism, Monbiot (2016) noted in his (obviously biased) article that neoliberalism “has played a major role in a remarkable variety of crises: the financial meltdownof 2007‑8, the offshoring of wealth and power, … the slow collapse of public health and education, resurgent child poverty,the epidemic of loneliness, the collapse of ecosystems, …” and so on. Even accounting for what may be hyperbole, the takeaway from Monbiot’s review would be that any policy that aligns with neoliberal ideology, aims, or processes should logically be viewed with caution. Indeed, while the neoliberal basis of furusato nozei undercuts the promise for rural Japan that is inherent in Japan’s Development State approach to centre-periphery governance relationships and, if anything, returns Japan’s tax redistribution policy to a state of rudderless policy incoherence, research emerging regarding the result of the policy has shown that the results of the Furusato Nozei program are not just often less than promised, but actually the opposite of what was promised. Instead of actually leading to a recovery for rural communities, Hagami’s (2017) analysis shows that the flow of donations has resulted in the creation of winners and losers across rural Japan, where those with appealing return gifts garner the lion’s share of donations, while other municipalities experience further weakening of their public finances, yielding overall greater inequalities within regions. The urban areas that generate a high volume of individual furusato nozei contributions can also see their local revenue sources diminished, such that now even urban wards within Tokyo and Osaka are claiming a negative fiscal balance due to the participation of local taxpayers in the program and the resulting diversion of their tax contributions to other municipalities (Nohara 2017). Rather than being a policy that is economically, politically and administratively viable, one with an entrepreneurially-sought and reality-tested outcome, one might ask whether furusato nozei is yet another, but exclusively Asian, example of neoliberal policy failure?

On the other side of this paper’s examination, the furusato of furusato nozei appears to be generating a sleight-of-hand approach to what should be a national, citizen-based ‘hometown consciousness’ toward tax contributions to communities in need. Furusato Nozei is a national experiment in taxpayers opting to help out their neighbours. And while research by Yabe et al. (2017) shows that contributions do indeed flow from urban areas, high population municipalities, and high tax-burden municipalities to rural areas, low population municipalities, and low tax-burden municipalities (as envisioned), the true question is the reason why. Indeed, there are questions regarding both general predispositions toward social contributions as well as the ‘pay taxes, get a gift’ aspect of the program. Taxation has been analysed extensively from the perspective of behavioural economics, with research revealing questions about effectiveness of tax incentives for charitable giving and showing that the “warm glow” effect of charitable giving can be both overstated and transitory (Eckel and Philip 2003, 2006, Crumpler and Philip 2008, Null 2010). Coming to similar conclusions in the case of furusato nozei, research by Sato (2017a, 2017b) and Yamaura et al. (2017), confirming data generated in online surveys, found that the altruistic motivations that were assumed in the operation of the Furusato Nozei program are less influential than the selfish motivations that are also at work with the inclusion of the return gifts (see Table 2).

Table 2 Motivation for Participation in Furusato Nozei Tax Program

Intage data

Seijiyama data

Appeal of the return gift



Reduction of tax burden



Want to contribute to a particular region


Want to contribute to a particular policy



Want to support my own hometown


Support a place where I have a connection


Support the Region


(%; multiple answer)

Source: Intage Research Survey 2016: Internet, 30,000+ valid responses;

Seijiyama data: 2015 Summer; 2,109 respondents.

The assumption of the furusato nozei scheme was that urban residents would tend to have altruistic motivations toward supporting furusato, the rural areas to which they felt attached (even if they may not have been residents there). However, the findings indicate that offering reciprocal gifts leads to a reduction in donors with altruistic motivations and an increase in donors with selfish, gift-seeking motivations. Indeed, one result of the Furusato Nozei tax program at an individual taxpayer level is a widening of economic inequality between high- and low-income earners (Hashimoto and Suzuki 2017) on the one hand, as high income earners are more likely to participate than low, with the reciprocal gifts distorting the original purpose even further, as altruism is replaced by selfishness on the other.

Finally, my own research into the consciousness of furusato nozei has yielded the following complex picture. Based on guided interviews with six focus groups (N= from six to ten participants) of Japanese taxpayers living in a rural area of Japan, most of the informants viewed their tax burden as appropriate and had a general understanding and appreciation of the ‘societal benefit’ of taxes paid to both local and central governments. Their view of furusato nozei was, predictably, more complicated: while most understood the objective of furusato nozei—although this was viewed more as ‘support’ than ‘redistribution—most also inherently understood that the Furusato Nozei program as it is at present is “probably better for the contributor than it is for the place that gets the contribution; we get to choose a gift, after all” (generalisation/translation by author). Comments made it clear that these informants felt that the only people who would participate in such a program would be those looking for a highly-prized gift item obtainable through the Furusato Nozeiprogram with minimum cost, confirming the motivational data introduced above. Expanding the discussion to the notion of municipal winners and losers, where some ‘win with surplus contributions on the basis of good gifts versus others losing by virtue of geographical or historical bad luck (i.e., no attractive return gift),’ most acknowledged that “it (such inequalities) couldn’t be helped and that this was the way these things always worked.” The upshot was that Furusato Nozei offered little to compensate for the reality of both situation and market forces (tourism, local products, economic growth, etc.) when it came to rural communities. Interestingly, most also offered that, unless one spent a lot of time getting acquainted with the rules, options, and potential return gifts, the program was “too troublesome;” this despite introduction of the many Websites available.

Concluding Remarks

This paper opened with questions of uniqueness, universality, and alterability. While a tax system similar to Furusato Nozei could be implemented through popular support and policy directives anywhere, a critical assessment of the neoliberal aspect in the operational working of Japan’s furusato nozei would invite one to question whether such tax code revisions were really needed, or were rather some administrative camouflage for other policy objectives. Is a furusato nozei system justified as a replacement to a centralised, negotiated, and presumably well-intentioned and systematic tax system? Furthermore, tax systems assume a national interest at work inherent in their obligatory character (‘everyone has to pay taxes to support their country’), begging the question about how far a tax system should go in attempting to generate the altruistic sense of commonness and mutuality that underlies such a Furusato Nozei program on the one hand, and how far a system should go in accepting that including materialistic elements might be more effective in garnering participation in such a system on the other. Can a tax system based on a return gift as kickback for ‘supporting myhometown’ be viewed favourably? The fiscal objectives and human-nature assumptions of Japan’s Furusato Nozei tax program appear to be valid and worthwhile, if not justified and noble; but are the justifications true and offered honestly? And is participation undertaken for valid, if not noble, intentions? The point (and question) about Japan’s Furusato Nozeitax program is not in its universality or compatibility; it is in its disingenuous neoliberal orientation and its presumed ‘hometown consciousness.’ And therein it forces on us questions regarding our conceptions of good governance and consciousness of shared effort and shared success.


Allison, A., 2013. Precarious Japan. London: Duke University Press.

Brenner, N., 2004. New state space: urban governance and the rescaling of statehood. Oxford: Oxford University Press.

Brenner, N., et al., 2003. Introduction: state space in question. In: Brenner, N., et al. eds. State/space: a reader, Malden, MA: Blackwell, pp. 1-26.

Campbell, J., 2002. Ideas, Politics, and Public Policy. Annual Review of Sociology, 28, 21-38.

Carrico, K., 2013. Towards and Anthropology of Taxation. Anthropology News, September/October 2013, 16-17.

Crumpler, H. and Grossman, P. J., 2008. An experimental test of warm glow giving. Journal of Public Economics, 92 (5-6), 1011-1021.

Eckel, C.C. and Grossman, P. J., 2003. Rebate versus matching: Does how we subsidize charitable contributions matter? Journal of Public Economics, 87 (3-4), 681-701.

Eckel, C.C. and Grossman, P. J., 2006. Subsidizing charitable giving with rebates or matching: Further laboratory evidence. Southern Economic Journal, 72 (3-4), 794-807.

Goldstein, J., 1993. Ideas, Interests, and American Trade Policy. Ithaca, NY: Cornell University Press.

Hall, P., 1989. The Political Power of Economic Ideas. Princeton: Princeton University Press.

Hashimoto, T., n.d. Discourses on Neoliberalism in Japan. Available at: src-h.slav.hokudai.ac.jp/publictn/eurasia_border_review/ebr_v5n2/EBR_v5n2_99.pdf [Accessed 15 December 2018].

Hashimoto, K. and Suzuki, Y., 2017. Henreihin no keihi muzukara kyho wo: Keizai kyoshitsu: Furusato nozei no zehi (Reveal the cost for the reciprocal gift voluntarily: Discussing the rights and wrongs of the hometown tax donation system). Nihon Keizai Shimbun, 6 April 2017.

Hill, R.C. and Fujita, K., 2000. State restructuring and local power in Japan. Urban Studies 37 (4), 673-90.

Hyodo, A., 2010. Nihon niokeru shinjiyushugi no kiten nikansuru kosatsu: chikuseki kiki to kaikyu kenryoku wo meguru giron wo tegakarini (Study on the Starting Point of Neoliberalism in Japan: Arguments on Accumulation Crisis and Class Power as a Clue). In: Hosei University Ohara Institute for Social Research and Suzuki, R., eds. Shinjiyushugi to Rodo(Neoliberalism and Labor). Tokyo: Ochanomizu shobo, pp. 13-28.

Ide, E. and Steinmo, S., 2009. The End of the Strong State?: On the Evolution of Japanese Tax Policy. In: Martin, I.W., Mehrotra, A.K. and Prasad, M., eds. The New Fiscal Sociology Taxation in Comparative and Historical Perspective. Cambridge University Press, pp. 119-137.

Intage Research, n.d. https://www.intage-research.co.jp/lab/report/20160728.html.

Japan Times, 2019. Government adopts bill to limit value of gifts in Japan hometown tax donation system. Available at:https://www.japantimes.co.jp/news/2019/02/08/national/government-adopts-bill-limit-value-gifts-japan-hometown-tax-donation-system/#.XOHxJS-B3fY [Accessed 20 May 2019].

Karatani, K., 1993. Origins of Modern Japanese Literature. Trans. Brett De Bary. Durham: Duke University Press.

Katz, R., 1998. Japan, the System That Soured. New York: Routledge.

Kimura, S., 2015. Goals and Reforms of Current Japanese Local Tax System. Hitotsubashi Journal of Law and Politics, 43,17-48.

Miyamoto, T., 2008. Jiyu e no toi #2: Shakai hosho—sekyurite no kozo tankan (Questions for Freedom #2: Social Security—Structural Turn-About in Security). Tokyo: Iwanami shoten.

Mochida, N., 2001. Taxes and Transfers in Japan’s Local Finances: Local Government Development in Post-war Japan. The International Bank for Reconstruction and Development/The World Bank. Available at: http://siteresources.worldbank.org/WBI/Resources/wbi37171.pdf

Mochida, N., 2006. Local Government Organisation and Finance: Japan. In: Anwar, S., ed. Local Governance in Industrial Countries, The International Bank for Reconstruction and Development / The World Bank. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=

Monbiot, G., 2016. Neoliberalism: the ideology at the root of all our problems. The Guardian, 15 April 2016. Available at: https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot

Morrison, L., 2013. Home of the Heart: The Modern Origins of Furusato. ICU Comparative Culture, 45, 1-27.

Mukawa, S., 2009. Shakaiseisaku no shakaigaku: Neoliberalism no kanatahe (Sociology of Social Policy: Beyond Neoliberalism). Kyoto: Minerva Shobo.

Murphy, R.T., 2017. Japan and the Shackles of the Past. New York: Oxford University Press.

Narita, R., 2000. Toshi kukan to kokyo. Kokyo no soshitsu to saisei, 12-36.

Niitsu, N., 2016. Innovative ‘Hometown Tax’ Donation Program Supports Municipalities. JFS Newsletter No. 168, August 2016.

NIRA, 2018. A New Stage for the Furusato Nozei System. Nippon Institute for Research Advancement, January 2018. Available at: English.nira.or.jp/papers/images/e-myvision33.pdf [Accessed 15 November 2018].

Nishikawa, I., n.d. Excerpts from The Concept of “Furusato”: Revitalising Local Area. Available at: http://info.pref.fukui.jp/furusatonouzei/eiyaku.pdf [Accessed 15 November 2018].

Nohara, Y., 2017. Rural ‘furusato nozei’ beer, beef thank-yous costing urban Japan much-needed revenues. The Japan Times, 13 January 2017.

Null, C., 2010. Warm glow, information, and inefficient charitable giving. Journal of Public Economics, 95 (5-6), 455-465.

Ohtake, H., 1999. Nihonseiji no tairitsujiku: 93-nen ikōno seikaihensei no nakade (The dividing issues of Japanese politics: political restructuring since 1993). Tokyo: Chuōkōron.

Rausch, A., 2014. Japan’s Heisei Municipal Mergers and the Contradictions of Neoliberal Administrative Planning. Asia Journal of Public Administration, 36 (2), 135-149.

Robertson, J., 1988. Furusato Japan: The Culture and Politics of Nostalgia. Politics, Culture, and Society, 1 (4), 494-518.

Sato, M., 2017a. Henreihin kojo taisho gai ni (Remove gift in return subjects covered by tax deduction). Nihon Keizai Shimbun, 7 April 2017.

Sato, M., 2017b. Pros and Cons of the “Hometown Tax” Donation Program: Return gifts should be excluded from deductibles. RIETI, 7 April 2017. Available at: https://www.reiti.go.jp/en/contribution/Sato-Motohiro/02.html.

Seijiyama. n.d. https://seijiyama.jp/research/investigation/inv_30.html.

Shibata, S., 2015. Neoliberalisation, contestation and Japan’s contradictory dis-accumulation regime. Colloque International Proceedings, 10-12 June 2015.

Steinmo, S. 1993. Taxation and Democracy: Swedish, British and American Approaches to Financing the Modern State.Yale University Press.

Swyngedouw, E., 1997. Neither global nor local: ‘glocalization’ and the politics of scale. In: Cox, K.R., ed. Spaces of globalisation, New York, NY: Guilford Press.

Tsukamoto, T., 2012. Neoliberalisation of the Developmental State: Tokyo’s Bottom-up Politics and State Rescaling in Japan. International Journal of Urban and Regional Research 36 (1), 71-89.

Tsukamoto, T., 2016. Why is Japan Neoliberalising? Rescaling of the Japanese Developmental State and Ideology of State-Capital Fixing. Journal of Urban Affairs 34 (4), 395-418.

Watanabe, H., 2010. Utau kokumin: shoka, koka, utagoe. Tokyo: Chuokoronsha.

Yabe, T., Kasai, A. and Kinoshita, H., 2017. Furusato nozei ha Tokyo ikkyoku shuchu wo zesei, chiho wo kasseika shiteirunoka (Rectifying Furusato Nozei’s Concentration on Tokyo and Revitalising Rural Areas). Tokushima University Sociological Research 31, 17-70.

Yamamura, E., Tsutsui, Y. and Ohtake, F., 2017. Altruistic and Selfish Motivations of Charitable Giving: Case of the Hometown Tax Donation System in Japan. Institute of Social and Economic Research, Osaka University, Discussion Paper 1003.


[1] Ministry of Internal Affairs and Communications Furusato Nozei portal cite: http://www.soumu.go.jp/main_sosiki/jichi_zeisei/czaisei/czaisei_seido/furusato/mechanism/about.html

[2] There are many private web-sites that offer both help in tax matters related to furusato nozei such as the necessary paperwork and the calculations for contribution-based deductions as well as presenting the gifts that prefectures and municipalities make available at various contribution levels. Examples include: Choice TRUSTBANK, Furusato Marumie, Furusato Plus, SatoFuru, Furupo. See: https://www.satofull.jp; https://furu-po.com; https://furunavi.jp.

About the Author

Anthony Rausch is professor at Hirosaki University (Japan). He has a PhD from Monash University. His research focuses on rural Japan. He is author of Cultural Commodities in Japanese Rural Revitalization: Tsugaru Nuri Lacquerware and Tsugaru Shamisen (Brill, 2010) and Japan’s Local Newspapers: Chihoshi and Revitalisation Journalism (Routledge, 2012). He also contributed “Regionalism and the Local” to The SAGE Handbook of Modern Japanese Studies (2015). He is on Researchgate and Academia.edu.

Email the author

Back to top