Chungnam Benchmarks 'Japanese Furusato Nozei'... Plans to Implement and Stabilize the System Next Year

[Asia Economy (Hongseong) Reporter Jeong Il-woong] Chungnam Province is preparing to benchmark Japan's advanced hometown tax system ahead of the operation of the Hometown Love Donation System next year.

On the 14th, the province announced that it recently held a meeting by inviting an agency responsible for operating Japan's hometown tax system to the region.

The meeting was organized to explain the current status of the Hometown Love Donation System and the progress of the province's research project, and to share the operation status and best practices of the hometown tax system currently operated in Japan.

Japan introduced the hometown tax system in 2008. The hometown tax system provides tax benefits such as income deductions and reductions in resident tax when donating to financially struggling local governments such as one's birthplace or residence. It is operated with the purpose of securing finances for local and rural areas and alleviating financial imbalances between regions.

In particular, Japan offers local specialty products as return gifts to donors through the hometown tax system, achieving effects of regional promotion along with increased sales of specialty products.

Additionally, donations are invested in projects to improve residents' welfare, establishing a virtuous cycle system that leads from system promotion and fundraising to welfare projects and regional promotion.

Based on this, it is reported that as of 2020, Japan's hometown tax market has formed and operates at around 6 trillion won.

The province plans to benchmark such cases in Japan to operate the Hometown Love Donation System tailored to local circumstances and successfully establish the system.

Above all, when the system is established on the ground, the province expects the scale of financial inflow through the Hometown Love Donation System to reach around 150 billion won, and a special demand for local agricultural and marine products mediated by return gifts to occur. These are the expected effects when the Hometown Love Donation System is activated like Japan's hometown tax.

In this regard, at the meeting, the province consulted with related parties such as Trust Bank Co., Ltd. and Change Co., Ltd. on return gift management and operation plans, differentiated promotional methods to encourage donations, and cases of discovering competitive return gifts, and exchanged opinions on the expected effects of system operation.

Change acquired Trust Bank at the end of 2018, and Trust Bank currently operates 'Furusato Choice,' the largest market in Japan operated by about 20 private hometown tax platforms.

Yoon Dong-hyun, Director of the Youth Community Support Bureau of the province, said, "The province is currently preparing for promotion of the Hometown Love Donation System, selection of return gifts and suppliers, ordinance establishment, and fund installation," adding, "The meeting was an opportunity to re-examine the ongoing preparatory process, and through this, the province will make every effort to ensure that the Hometown Love Donation System is successfully established on the ground with its introduction next year."

Meanwhile, the enforcement decree of the Hometown Love Donation System is currently under review by the Ministry of Government Legislation and is expected to be completed as early as this month. The enforcement decree will include fundraising methods and procedures, limits on return gifts, and criteria for selecting suppliers.