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Intergovernmental competition for donations: The case of the Furusato Nozei program in Japan

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  • Fukasawa, Eiji
  • Fukasawa, Takeshi
  • Ogawa, Hikaru

Abstract

This paper shows that municipalities compete excessively for donations under a unique program called Furusato Nozei (Tax payment to hometown) in Japan. Under the program, people make donations to their favorite municipalities and municipalities that have received donations give reciprocal gifts in return. This causes governments to compete for donations by setting “return rates” — the value of a gift as a percentage of the donation received. Our estimates show that, in the most likely case, this competition reduces net revenue by at least 7.5% compared to when the municipalities do not compete for donations.

Suggested Citation

  • Fukasawa, Eiji & Fukasawa, Takeshi & Ogawa, Hikaru, 2020. "Intergovernmental competition for donations: The case of the Furusato Nozei program in Japan," Journal of Asian Economics, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:asieco:v:67:y:2020:i:c:s1049007820300221
    DOI: 10.1016/j.asieco.2020.101178
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    4. Fukasawa, Eiji & Fukasawa, Takeshi & Ogawa, Hikaru, 2020. "Intergovernmental competition for donations: The case of the Furusato Nozei program in Japan," Journal of Asian Economics, Elsevier, vol. 67(C).
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    Cited by:

    1. Kentaka Aruga, 2020. "Is Environmental Awareness a Good Predictor of an Individual’s Altruism Level?," Sustainability, MDPI, vol. 12(19), pages 1-12, September.
    2. Ogawa, Akinobu & Kondoh, Haruo, 2024. "How Does Intergovernmental Competition through the Hometown Tax Donation System Affect Local Government Efficiency?," MPRA Paper 121688, University Library of Munich, Germany.
    3. Fukasawa, Eiji & Fukasawa, Takeshi & Ogawa, Hikaru, 2020. "Intergovernmental competition for donations: The case of the Furusato Nozei program in Japan," Journal of Asian Economics, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Interregional fiscal competition; Donation; Efficiency;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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