The internal affairs ministry said Friday that it will bar four municipalities from taking part in the country¡¯s furusato n¨­zei hometown tax donation program for two years from Monday due to their excessive spending on the program.

The municipalities affected are the city of Soja in Okayama Prefecture, the city of Unzen in Nagasaki Prefecture, the town of Miyaki in Saga Prefecture and the town of Yamato in Kumamoto Prefecture.

Donations to the four municipal governments will not be eligible for income and residence tax deductions during the suspension period.

Under the program, thank-you gifts for donors should be worth 30% or less of the value of donations.

But in fiscal 2024, which ended in March this year, Soja broke the limit by purchasing rice as a return gift at over ?27,000 ($180) per 60 kilograms, far more than the ?18,000 the city had planned to spend before rice prices started climbing in the country. Its ratio of gift purchase costs to donations ended up rising to 46.4%.

In the year through September 2024, Miyaki, Unzen and Yamato failed to meet the requirement that local governments curb their respective overall furusato n¨­zei-related expenses at 50% of the contribution sum, due chiefly to rising shipping fees for gifts sent in return. As a result, their two-year suspension will be the first punitive action ever on a violation of the 50% rule.

The ministry also said it will allow 1,781 prefectural and municipal governments to participate in the tax-deductible donation program in the year from next month, including the city of Sumoto in Hyogo Prefecture, which had been excluded after breaking the 30% gift cap.

On the other hand, the city of Suzaka in Nagano Prefecture and the Okayama town of Kibichuo will continue to be excluded from the program after being suspended from it in June.

The Tokyo Metropolitan Government has been refusing to participate in the furusato n¨­zei system, claiming that outbound donations driven by thank-you gifts are eroding residence tax revenues that would otherwise be allocated for improving local administrative services.