Photo/Illutration Representatives of the Izumisano city government and the Ministry of Internal Affairs and Communications state their cases over whether Izumisano should be allowed to participate in the "furusato nozei" system before the Central and Local Government Dispute Management Council in July. (Asahi Shimbun file photo)

Izumisano city in Osaka Prefecture will take the minister of internal affairs and communications to court for continuing to exclude the city from the popular "furusato nozei" (hometown tax) program.

Mayor Hiroyasu Chiyomatsu announced on Oct. 3 that the city would take the action to "demonstrate the legitimacy of what we did and the illegality of the Ministry of Internal Affairs and Communications."

The internal affairs ministry in June removed Izumisano and three other municipalities from the list of local governments eligible to participate in the hometown tax system after taking issue with how they ran their programs.

The system allows people to give a portion of their residential taxes as a donation to the local government of their choice, a portion of which is returned to them in the form of gifts from the municipalities.

Izumisano had become popular as a recipient of such donations because of the wide range of gifts it offered in exchange. In fiscal 2018, Izumisano received 49.8 billion yen ($466 million) in donations, the most of any municipality.

The figure was about twice what the next-highest municipality received.

But ministry officials took issue with how Izumisano implemented the furusato nozei system.

In principle, municipalities should only return in the form of gifts about 30 percent of the amount received as a donation and gifts should be limited to local specialty products.

However, Izumisano entered into agreements with local municipalities around Japan, at one time offering about 1,000 different gifts to donors.

The city also ran a campaign that included giving donors Amazon gift certificates before the ministry started implementing tougher restrictions on the system.

At one point, Izumisano was returning as much as 70 percent of a donation to the donor in the form of gifts.

Izumisano asked the Central and Local Government Dispute Management Council to look into how the internal affairs ministry handled the matter.

In September, the council issued a recommendation that took the internal affairs ministry to task for using a directive not legally binding as the reasoning for removing Izumisano from the hometown tax system.

The ministry was asked to reconsider its decision.

But on Oct. 3, the ministry said it would continue to exclude Izumisano and used a different argument for reaching that decision.

As it is, the city will be unable to participate in the hometown tax system at least until the end of September 2020.

By refusing to let Izumisano participate, the ministry is caught in a bind because one of its goals is to promote local autonomy.

Moreover, the council whose recommendation was effectively being ignored is under the jurisdiction of the internal affairs ministry.

Yoshihiro Katayama, a former internal affairs minister who is now a professor of local autonomy at Waseda University, criticized the latest decision to keep Izumisano off the tax donation program.

While faulting Izumisano for the excessive measures it used to gather donations, Katayama said the internal affairs ministry violated the principle of promoting local autonomy when it made the decision because the city had merely disobeyed a directive that had no legal basis.

Katayama said the measures used by Izumisano showed that the hometown tax system itself was defective and should be revised so there is no further competition among local governments to gain donations from taxpayers.