Connecting regional revitalization through the circulation of "people, goods, money, and information"

The currently trending hometown tax donation system allows individuals to make donations to their hometowns or regions they wish to support. Donors receive special tax deductions when filing their taxes. Donors can specify how their funds are used, and many municipalities also send thank-you gifts. We spoke with Ms. Tamayo Sunaga, CEO of Trust Bank Co., Ltd., who quickly launched a comprehensive website to encourage more people to utilize this hometown tax donation system.

Creating services that revitalize local communities

 

In September 2012, we launched the comprehensive hometown tax donation site " Furusato Choice," which has since received over 8 million cumulative donation applications. While working at a venture company, I vaguely decided to "start a business in my 30s," but I didn't actually start the company with hometown tax donations in mind. However, I did have the desire that if I were to start a business, I wanted to "create a service that revitalizes regions." Every time I returned to my hometown of Isesaki City, Gunma Prefecture, I could physically feel the decline of the local economy – the candy stores I frequented as a child were gone, and shuttered shopping streets were becoming more noticeable.

So, I wondered if I could help revitalize regions through the web, which I'd been involved with for years. Brainstorming with colleagues, one keyword that emerged was the hometown tax donation system. Donors can choose to donate to their hometown, a region that supported them, or a region they wish to support. This donation (hometown tax donation) allows them to receive a special tax deduction when filing their taxes, helping shift some tax revenue away from urban areas and toward local governments. I felt this system held tremendous potential.

Personally, I'd lived in Isesaki City for 18 years, yet I'd never paid a single yen in taxes there since I worked in Tokyo. I realized that by promoting this system online – highlighting how local products circulate as thank-you gifts from municipalities, contributing to revitalizing local industries, and allowing donors to choose how their contributions are used – I could effectively communicate, "There's such a great system out there!" This conviction spurred me into action.

Initially, the site focused on making the system accessible and enjoyable, avoiding the intimidating term "tax payment," to connect it with everyday people. While this approach proved effective during the initial growth phase of donations, our ultimate goal aligns with the core purpose of hometown tax donations: raising taxpayers' awareness of local government policies and their impact. Therefore, we are gradually rebuilding the site to better communicate information and messages about regional challenges, local government perspectives, and the tangible changes hometown tax donations are bringing to communities.

 

Leveraging a win-win-win mechanism to spark regional self-reliance

 

The total amount of hometown tax donations continues to grow, reaching approximately 165.3 billion yen in fiscal year 2015. Why does hometown tax donation attract so much interest? I believe it's because the system enables donors, municipalities, and local producers to build a "win-win-win" relationship. There are already numerous examples where it has revitalized local industries providing thank-you gifts.

Meanwhile, municipalities naturally return the remaining funds from the expenses used for these thank-you gifts to their residents. For example, in Kamishihoro Town, Hokkaido, with a population of 5,000, donations earmarked for childcare and countering the declining birthrate were used to make the fees for the town-run certified childcare center free for ten years, starting this April. As a result, mothers began working en masse, thinking, "Now we can leave our children there." As shipments of thank-you gifts increase, even the gelato shop facing labor shortages is gaining new working mothers. Local governments, producers, and residents. Here too, a positive win-win-win cycle is beginning to take shape.

Running the site also revealed something unexpected. You'd think municipalities offering more luxurious thank-you gifts would be chosen for the same donation amount, right? While many are initially motivated by that, once people donate, that municipality becomes a "point of interest" for them. And municipalities that use donations for development and effectively communicate this are gaining repeat donors. Donations overwhelmingly flow to municipalities that collaborate with their communities to develop thank-you gifts or brainstorm how to promote their initiatives. Those that merely slap together a gift item tend to attract far fewer donations.

While hometown tax donations present a significant opportunity for municipalities, relying solely on them to increase donations risks trapping the flow of money within this system. In the case of Kamishihoro Town mentioned earlier, donations led to job creation, expanding the local economy.

For businesses, even if their products become popular as hometown tax thank-you gifts, it simply means they were chosen from among the available gifts. While fierce competition exists there, paying attention to donor trends and comments can yield a wealth of marketing insights for competing more openly on a national scale.

What lies ahead is the "self-reliance" of municipalities and producers. Regions are now actively moving forward from this perspective.

The next theme is "Human Circulation." Creating exchange with cities

 

To revitalize rural areas, we believe it's crucial to extend the cycle of "people, goods, money, and information"—which currently circulates only within major cities—to the regions. Through Furusato Choice, we feel we've been able to contribute somewhat to the circulation of the latter three elements. However, the greatest desire for the vast majority of municipalities is to attract I-turns, U-turns, migration, and permanent settlement. Simply put, they want people to come. Right now, we're focused on creating mechanisms to encourage as many people as possible to relocate to rural areas. Currently, there's almost no interaction between urban and rural areas, which is the first step toward relocation. Therefore, we plan to create initiatives that encourage human exchange. For example, offering programs that let people deeply experience rural areas as thank-you gifts for hometown tax donations. Additionally, through our newly launched hometown search assistance site " Local Biyori, " we aim to create plans that promote human interaction, independent of hometown tax donations.

As more people move to these areas, industries grow and thrive, creating further demand for labor. Tax revenues increase, reducing reliance on the Local Allocation Tax. We believe this virtuous cycle leads to self-sufficiency and regional revitalization. We intend to continue developing diverse initiatives based on this conviction.