Furusato Nozei, Hometown Contribution Tax System, was officiallyintroduced on April 30, 2008. Fukui Prefecture Governor, Issei Nishikawa
was first to advocate this new tax system.
Here are some brief extracts from his book, The Concept of “Furusato”:
Revitalizing Local Areas.

The Institutionalization of ‘Furusato’
The Furusato Contribution Tax System was officially introduced
through an amendment to the Local Tax Law on April 30, 2008.
To explain briefly, when residents make contributions (as taxpayers)
to local governments at the prefectural, city, town, or village level that theyregard as their own furusato, the tax imposed on their residential area isreduced by that same amount the following year. This system enables
people to transfer their tax payments from the governing body of their current
residence to a local government which they favor as their furusato. In realterms, this allows taxpayers to donate up to ten percent of their tax payment(in addition to their normal payment) without an increase in the total paid.
This reform to the tax system was advocated by local governments,and I proposed it and saw to its enactment.

The Meaning of ‘Furusato’, Broadly Conceived‘Furusato’, in its original meaning, refers to a one’s birthplace. Evennow, for a majority of people it retains this meaning. When planning theHometown Contribution Tax System, I also though that “furusato” should betaken to mean the place where one was born, brought up, and educated. Thisis because I thought it important for there to be a desire to give back, and beof use, to one’s furusato.

The Concept Behind the Hometown Contribution Tax SystemThe Hometown Contribution Tax System is a device meant to give atangible form to the people's affection toward their furusato. Since
contributions to it assume the form of tax payments, the system brings about
new possibilities for restructuring the antagonistic relationship between citiesand local areas, and contributing to the enrichment of democracy. I will takeup this topic primarily from the viewpoint of the relationship between
furusato and the outside.

“Life Cycle Balance” Taxation System
Most young people receive administrative services such as childcare
and education in their hometowns from birth to graduating high school. After
that, they go to university or college, get a job, and are in a position to pay
taxes in big cities.
Big cities entrust childcare and education to local areas, and simply
become the recipient of taxes as a result. Systems of fiscal adjustment workfor correcting imbalances across all sectors of Japan’s local governments. But
fundamentally speaking, the balance of tax income and expenditures between
local areas and cities is not maintained.
Additionally, it should be emphasized that the amount of thisimbalance is too large. The total monetary amount of administrative services
received by young people who grow up in Fukui Prefecture from birththrough high school is about 18 million yen per person. There is a sense thatnearly 10 billion yen in public expenditures, roughly calculated, is flowing
out into big cities. The idea of correcting people’s life cycle balance was thebasis of the concept of the Hometown Contribution Tax System.

Taxpayer Sovereignty
With the Hometown Contribution Tax System, we are able to hope forthe development of our furusato and undertake useful actions of our own
volition. This system enables us to elevate the whole of Japan throughlooking back on our furusato. It enables us to choose, directly andvoluntarily, the local government to which we pay taxes as well as thepolicies for which we want our tax payments used. With the individual assovereign, the potential exists for taking action that will directly influencesociety. The possibility is there for encouraging people to be interested in
how their taxes are used.