Japan's tax diversion scheme lifts wagyu beef sales

By Kathryn Wortley

- Last updated on GMT

Japanese wagyu beef is among the most popular tax gifts in Japan
Japanese wagyu beef is among the most popular tax gifts in Japan
A scheme by Miyazaki Prefecture, which offers local wagyu in return for tax payments to its municipalities from residents in other parts of the country, is supporting regional livestock farmers and meat producers.

According to Kenta Murahashi, of the Kyushu island prefecture’s All Miyazaki Business Division, evidence from fiscal 2015, the first year of the gift scheme, indicated that it had an “economically good impact​” on the prefecture’s meat industry.

Meat is among the top three most popular tax gifts sent out from Miyazaki, along with mangoes and caviar.

Miyazaki’s meat-gift scheme is tapping a national ‘furusato nozei’ (hometown tax) system, which was launched in 2008 as a way for taxpayers to support their hometowns if they had moved away by sending them (at that time) 10% of their local residence tax payments from where they lived. However, money can be sent anywhere. As recipient towns, cities and prefectures began to send thank you gifts in the form of high-quality local produce, taxpayers began to shop around to find the best gifts in return for their payments.

Tax for gifts
 
The top beneficiaries are prefectures such as Hokkaido, which is famed for its seafood and dairy products, and Miyazaki, which is the country’s second-largest producer of Japanese Black (a wagyu breed​).

Although the Ministry of Internal Affairs and Communications stated in April 2016 that towns should not solicit tax revenue with gifts, the advisory is legally unenforceable. In April 2015, the percentage of payment that could be channelled to other areas was increased to 20%, and there are currently many commercial websites for hometowns all around Japan that promote the gifts participants will receive.

Since fiscal 2015, Miyazaki has been cashing in on its reputation for beef​ in its thank you gifts, which also include fruit, fish and seafood.

Miyakonojo’s population of 164,000 was the beneficiary of ¥4.2 billion ($36.7m) in redirected local tax revenue in fiscal 2015, which is about 5% of its total income, making the town the top area for revenue from redirected local taxes among Japan’s 1,700 municipalities.

Miyazaki is very famous for meat, and it is a local product to be proud of. It’s a very popular choice [for people who send us tax payments],​” explained Murahashi. “In fiscal 2016, we added to our meat selection because we want more people to choose meat, and then know and love it.​”

The move has proved successful. The town of Miyakonojo, in Miyazaki, is putting particular effort into promoting its meat gifts, according to Murahashi. Someone who redirects ¥50,000 ($436.51) can receive 3kg of high-grade beef, which would cost ¥30,000 ($264) retail.

To supply the meat gifts, the prefecture buys meat from a large local meat supplier, which then collaborates with many smaller ones as well as livestock farmers. This directly and indirectly increases demand for local meat products (because the supplies are an excellent promotional tool).

Related topics: Financial, Exotic, Japan, Beef

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