This Japanese tax has a problem: It’s too popular

Japan’s hometown tax drains revenue from major urban centers by redirecting billions of yen in resident taxes toward smaller municipalities in return for borderline-lavish gifts. | REUTERS

Oct 1, 2026

Imagine a tax that people just love to pay.

Japan’s furusato nozei, or hometown tax, is just that. Indeed, it could be the world’s most popular levy, one that people rush to file every year. There’s a simple reason, and it’s far from altruistic: It allows residents to redirect a portion of what they would normally pay to their local government to another municipality elsewhere in the country, usually in return for a “gift.”

These can include wagyu beef, fancy fruit or sake. In effect, you front-load a portion of next year’s taxes and get about a third of that amount back in produce. Since the money has to be paid anyway, there’s little sense not to participate — and despite the “hometown” name, you don’t need any connection to the town or village you chose.

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