Tokyo, Sept. 24 (Jiji Press)–Lineups of return gifts offered for donations made under Japan’s “furusato nozei” hometown tax donation program may noticeably change as the internal affairs ministry is set to tighten rules for some items in October. The ministry will introduce a stricter standard for the value locally added by manufacturing and processing goods, such as electrical appliances and processed foods, that use materials procured elsewhere. Local governments offering many manufactured or processed items as return gifts are busy coping with the rule change. Amid rising raw materials prices, many gifts may fail to meet the new standard and disappear from the lineups. Under the furusato nozei program launched in 2008, local governments are required to limit the procurement costs of their return gifts to up to 30 pct of the donation amounts. The portion of each donation exceeding 2,000 yen is deducted from the donor’s resident and income taxes in the following fiscal year, subject to income-based limits. As the purpose of the program is to encourage taxpayers to donate to their hometowns or local governments they wish to support, the value locally added through manufacturing and processing is required to exceed 50 pct of the procurement costs for return gifts if their materials are sourced from other regions. Currently, the ministry only checks how local governments calculate the added value. But starting on Oct. 1, local governments will be obliged to show the amounts of added value they calculated and disclose documents certifying that the items meet the standard. The ministry will consider ways to address cases that may violate the 50 pct rule. It is inspecting local governments that offer foreign wine as return gifts after maturing the wine in local places such as tunnels. According to the ministry, the new rules are expected to affect about a half of all return gifts, including tissues, skin lotions, health foods and electrical appliances. “The impacts will be bigger on items for which the proportion of materials procured elsewhere is relatively high, as well as those for which it is hard to determine the amounts of added value in number,” said an official of the operator of hometown donation portal Furusato Choice. Of the gifts offered by a city in the western prefecture of Hyogo, one-fourth are expected to be affected by the rule change. The city government has responded by distributing papers instructing suppliers of such items how to prepare certificates. An official of the city government said that some operators were uneasy about showing details. But “there is no point in having our designation revoked for a violation. We want to offer gifts in compliance with the rules,” the official stressed. For the city of Oyama, Tochigi Prefecture, about 460 out of its 680 gift items will be affected by the rule change. About 90 pct of the donors to the city choose tissues as return gifts. From around May, the Oyama government has informed relevant business operators of the rule change through briefings and other means. Despite that, some items fail to meet the new standard due to soaring prices of raw materials procured elsewhere. “Efforts of local companies to curb their costs may backfire” due to the obligation to prove in numbers that they comply with the 50 pct rule, an Oyama government official said. END [Copyright The Jiji Press, Ltd.]
