Discussion Papers 2019

CIRJE-F-1129	"Intergovernmental Competition for Donations : The Case of the Furusato Nozei Program in Japan"
Author Name	Fukasawa, Eiji, Takeshi Fukasawa and Hikaru Ogawa
Date	October 2019
Full Paper	PDF File
Remarks	Subsequently published in Journal of Asian Economics, vol.67, 101178.

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. Our estimates show that municipalities facing competition to attract donations provide excessive gifts to donors, and net revenue from the program is 10.4% to 12.1% lower than in a scenario without competition.

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. Our estimates show that municipalities facing competition to attract donations provide excessive gifts to donors, and net revenue from the program is 10.4% to 12.1% lower than in a scenario without competition.