Osaka Court Rejects City's Claim Over Tax Donation

The tax donation system allows taxpayers to make donations to municipalities of their choice and have their income tax and residence tax reduced.

But the system created intense competition among municipalities to attract such donations by offering return gifts to donors.

To curb the competition, the internal affairs ministry revised a law last June and introduced new regulations on such gifts.

The ministry then excluded Izumisano City from the tax donation system. The ministry saw it as a problem that the city received a sizable amount of donations by offering extravagant gifts to donors.

The city had filed a lawsuit with the Osaka High court against the ministry in a bid to reverse the decision.

The city argued that it is illegal to be excluded from the system based on actions before the new regulations went into effect.

On Thursday, presiding judge Hiroyuki Samura said the regulation was introduced to curb the overheated competition, which caused a vicious cycle and adverse effects that contradict the system's original purpose.

He said there is no problem in taking the city's past actions into account to decide which municipalities will be eligible for the system.

The judge said the city collected donations inappropriately, which had an impact on other municipalities. He added that excluding the city from the system does not constitute a breach of law.

Izumisano Mayor Hiroyasu Chiyomatsu told reporters after the ruling that it's a shame that the court dismissed the claim. He says he feels sorry for residents who have supported the city over the issue. He says the city will decide whether to appeal to the Supreme Court after consulting with their lawyer.