The Osaka High Court on Thursday ruled that the central government’s reduction โฃof special taxโ grants to izumisano city was illegal, upholding aโ 2022 Osaka District Court โฃdecision. The dispute stemmed โฃfrom the city’s ample revenue generated through the furusato nลzei (hometown tax donation) system.
Presiding โjudge โคKenjiโข Maki dismissed the central government’s appeal, affirming that reducingโค Izumisano‘s grants based on donationโค revenue exceeded the authority granted by the local tax โขgrants law.
Izumisano received approximately ยฅ49.8 billion in donations โduring fiscal 2018,โ the highest amount of any Japanese โขmunicipality under the hometownโข tax program. Following this, the central government revised an internal affairs ministry ordinance to factor donation revenues into the calculation ofโ special tax grants. โAs an inevitable result, Izumisano’s grants for fiscal 2019 โwere slashed by 89% to โroughlyโ ยฅ53 million, excluding disaster relief funds.
the city filed a lawsuit in 2020 seeking to nullify the grant reduction. While the highโฃ court initially dismissed the โcase in 2023 on โproceduralโ grounds – arguing disputes between administrative entities areโ not subject to trial – the Supreme Court overturned that decision in โขFebruary, determining the dispute concerned specific rights and obligationsโค and was therefore justiciable.
Judge Maki explained โthat the localโฃ tax grants law defines grant โคamounts based on “typical revenue” of local governmentsโข andโฃ does not include donations within that definition. He stated that incorporating donation revenue โคinto grant calculations requires a legislative โdecision reflecting politicalโ and policyโ considerations.
Izumisano Mayor Hiroyasu Chiyomatsu called the ruling “significant โinโ terms of rectifying the local tax allocation management” and urged the โฃcentral government to promptly restore the city’s grants without furtherโ appeal.
Internal affairs minister Seiichiro Murakami statedโ the central government will carefully review the โruling and determine its next steps.
The furusato nลzei system allowsโฃ taxpayers toโข donate to local governments of their choice and receive tax benefits โคin return.