Commission fees paid by local governments to intermediary website operators as part of Japan¡¯s?furusato n¨­zei hometown tax donation program reached 11.5% of the value of donations in fiscal 2024, an internal affairs ministry survey showed Tuesday.

The ministry plans to urge such portal site operators to lower their commission fees, as part of plans to increase the amount of donated funds made available to local governments.

¡°Commissions for websites alone have reached a high level,¡± internal affairs minister Yoshimasa Hayashi told a news conference. ¡°We¡¯re strongly aware of this issue.¡±

In the survey, which was conducted between February and March, the ministry asked 1,788 local governments across Japan how much they had paid portal site operators.

Of the ?1.2 trillion in donations made via furusato n¨­zei portal sites, commissions totaled ?137.9 billion, comprising ?116.6 billion in outsourcing fees and other administrative costs, ?16.1 billion in financial settlement fees and ?5.2 billion in public relations costs.

Of those surveyed, 228 said they negotiated with website operators to lower administrative costs. Only 13 of them said they were able to secure an agreement to cut the costs, leading to calls urging the central government to address the situation.

Under the furusato n¨­zei system, local governments are required to spend no more than 30% of the donation amount on gifts given to donors in return for their donations.

The ministry believes that lowering portal site commissions is necessary as it aims to bring down local governments¡¯ total costs in the program ¡ª including all expenses associated with the return gifts, such as the cost of the gifts and the overhead of the commissions ¡ª to no more than 40% of the donation amount, while raising the portion the local governments can use to 60% or more.

Under the recently enacted revision of the local tax law, the amount of furusato n¨­zei funds local governments can use as their own financial resources after deducting costs will be raised to at least 60% of the donated amount over the next four years.

For those using the furusato n¨­zei system, the value of donations to a local government of the donor¡¯s choice minus ?2,000 is deducted from the donor¡¯s residential and income taxes. Many local governments offer gifts to donors in return.