Japan's Hometown Tax
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Japan's Hometown Tax
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Re: Japan's Hometown Tax
#2I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting).
On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.
Re: Japan's Hometown Tax
#3This is absolutely fascinating, and (while Japanese culture has a number of key differences to the US that make it work) something that we can learn a lot from.
Re: Japan's Hometown Tax
#4That was a fascinating read! I love when things like this happen and some new emergent behaviour appears that was unexpected.
This did end up much better than most perverse incentive situations. In fact, I'm not even sure I'd call this a perverse incentive but maybe I'm musinderstanding the definition.
Re: Japan's Hometown Tax
#5This sounds like a good way to redistribute funds, but at the cost of lowering total revenue. If taxes are raised to make up for the often hometown-branded but often highly liquid gifts, it will be fine, but 1) I imagine raising taxes is going to be highly sticky, and 2) it's a flat, regressive tax, making it either forced gift-buying for people who probably shouldn't be buying themselves gifts or a government subsidy for the voucher-brokers.
If you're a Japanese politician, you should probably invest heavily in voucher-brokers, then lobby for a rise in the tax.
Re: Japan's Hometown Tax
#6What a fascinating concept. I would love to donate to my hometown and just get some raisins back as a gift once in a while. But I could really see the idea struggling through city council meetings because of the “well you could just donate to the city and then just buy some raisins on the side?”.
And that’s a testament to how ideas can evolve overtime and be accepted which otherwise would never be considered.
Re: Japan's Hometown Tax
#7Very interesting. A scenario came to mind - a city sends back a local delicacy. Then it notices that the number of donators is increasing. Looks further into it and finds that the delicacy is very popular. Now it has identified a product that it can independently promote and the city can earn more revenue. So many possibilities :)
Re: Japan's Hometown Tax
#8This sounds like a good way to redistribute funds, but at the cost of lowering total revenue. If taxes are raised to make up for the often hometown-branded but often highly liquid gifts, it will be fine, but 1) I imagine raising taxes is going to be highly sticky, and 2) it's a flat, regressive tax, making it either forced gift-buying for people who probably shouldn't be buying themselves gifts or a government subsid…
I'd expect that the end-state would be that tax rates go up to maintain desired revenue levels, the localities all bid up to the max amount of refund, and the whole system works not quite as well as the day before the system was invented -- except that a bunch of works gets expended on the useless competition for funds, and the money distribution gets unfairly balanced based on whichever locality has more clever marketing.
This is exactly counter to the concept government -- a system that should be run as a monopoly ends up being full of waste due to competition with no net improvement.
Re: Japan's Hometown Tax
#9This sounds like a good way to redistribute funds, but at the cost of lowering total revenue. If taxes are raised to make up for the often hometown-branded but often highly liquid gifts, it will be fine, but 1) I imagine raising taxes is going to be highly sticky, and 2) it's a flat, regressive tax, making it either forced gift-buying for people who probably shouldn't be buying themselves gifts or a government subsid…
Liquid gifts you say? Well it just so happens my 'hometown' is Loretto, Kentucky.
https://www.google.com/maps/dir//Maker's+Mark+Distillery,+33...
Re: Japan's Hometown Tax
#10Couching this in terms of Japanese culture is unhelpful in my opinion. The return gifts probably wouldn't exist in the first place elsewhere, but allowing them is simply a blatant loophole that various local governments have cynically abused to increase their revenue and this is something that would happen in any country.
The biggest problem is that some local governments are apparently giving return gifts that have a value that's higher than the 2000 yen part of the hometown tax that isn't tax deductible, which means that by opting in to donating to these local governments you do slightly better than if you didn't donate money in the first place. These governments are obviously trying to get people with absolutely no local connection to send money purely for the gifts.
One option would be to set a limit on the value of the gifts, but there's absolutely zero reason to allow the return gifts in the first place. The whole reason for the first 2000 yen not being tax deductible is this is something you are only supposed to do if you seriously want your money to go to a local government, and allowing non-taxed return gifts defeats the intention of how the system is set up. Having tax money go back into return gifts is also ridiculously inefficient.
Unfortunately, based on the way the government is set up, rural votes have disproportionate power, and for this reason the LDP has a tendency to pander to rural interests, so they probably have no interest in eliminating the gifts entirely. However, at least they recently announced that they are looking into introducing legislation to limit the value of gifts (and ban the worst abusers from participating entirely) in the next regular session of the Diet.