“Cataract Surgery” and “Cosmetic Surgery” Through the Hometown Tax Program… Could Local Patients Bear the Brunt? Experts Sound the Alarm

“Cataract Surgery” Instead of Meat?

Meat, rice, and seafood have traditionally been the standard return gifts for the “Hometown Tax” program. Now, however, medical services are making their way into the mix.

On July 1, ’26, Tsukuba City in Ibaraki Prefecture added “Cataract Treatment Support Vouchers for Multifocal Intraocular Lenses,” provided by Takada Eye Clinic in the city, to its list of return gifts.These vouchers can be used to cover costs not covered by insurance; a donation of 500,000 yen provides a subsidy of 150,000 yen. According to the clinic’s announcement, four types of vouchers are available, covering up to 1.5 million yen (for a donation of 5 million yen). The program is open to people registered as residents outside the city, and the vouchers cannot be resold or exchanged for cash.

There are precedents for this. In December 2025, Sapporo City, Hokkaido, offered coupons redeemable for dental implant treatment at GDH Implant Office Sapporo as thank-you gifts. A donation of approximately 330,000 yen yields a 100,000-yen voucher. In Fujisawa City, Kanagawa Prefecture, gift certificates from the Shonan Beauty Clinic Fujisawa branch are available, with the highest value being 300,000 yen.

Although they are all medical services, the specifics differ. Multifocal intraocular lenses have been classified as “selected medical care” since 2020, meaning patients pay a copayment on top of insurance-covered treatment. Dental implants and cosmetic procedures, however, are “private medical care” services for which patients bear the full cost.

Why focus on medical services now? We asked the Planning and Management Division of Tsukuba City.

“We view the Hometown Tax Donation program as a way to ‘promote the appeal of goods and services available in Tsukuba City.’ In particular, we intend to place a strong emphasis on ‘experiential return gifts’ that can serve as an incentive for people to actually visit Tsukuba City.”

The return gift from Takada Eye Clinic also began with a consultation from the clinic itself and was registered after confirmation by the Ministry of Internal Affairs and Communications. The city views this as an extension of experiential return gifts, in that it serves as an incentive to visit the city.

However, the city’s response was somewhat evasive.

“Regarding ‘medical return gifts,’ which is the theme of this discussion, we have no intention of actively expanding or promoting them.”

A reason was also provided.

“Although we have received approval from the Ministry of Internal Affairs and Communications, amid a trend toward stricter standards for locally produced goods, this is one of the items that is difficult to classify as a service unique to Tsukuba City.”  

The very municipality that adopted the program has explicitly stated that it has no intention of making it a new pillar of its policy.

How do public finance scholars view this phenomenon? We asked Professor Kensuke Yoshihiro of the Faculty of Economics at Momoyama Gakuin University, who researches the “Hometown Tax” program.

“Healthcare” Under Scrutiny Amid Tighter Rules

Professor Yoshihiro cited the stricter standards for thank-you gifts as the underlying factor.  

“The Ministry of Internal Affairs and Communications’ criteria regarding how much added value remains within the region have become much stricter over the past year or two.In the past, there were return gifts where it was unclear whether they were truly local specialties—such as precious metals or gold制品. Consequently, attention has shifted to services produced 100 percent within the region. I suspect this is why medical services have emerged.”

When it comes to intangible services, travel vouchers and lodging vouchers were already available. Is medical care any different from those?

“In principle, I think they’re the same. If a town has a charismatic hairstylist, a voucher for that salon could be used as a thank-you gift. If you ask how offering cutting-edge medical treatments not covered by insurance differs from getting a haircut, there isn’t a major difference.”

However, he continues.

“When this extends to life-or-death matters like cancer treatment in the future, we’ll have to consider the implications of including them as return gifts. Cutting-edge medical treatments are already traded on the market, and the fact that a price is placed on human life remains unchanged. Even so, including them in the hometown tax donation program is a different matter.”

The Ethical Contradiction of “Buying Medical Care” with Tax Money  

It amounts to residents of other municipalities covering the costs not covered by insurance through their local income taxes.

“Japan’s healthcare system is, in the first place, supported by substantial taxes and social insurance premiums.Even in the private medical sector, a significant amount of tax revenue goes toward training doctors. Healthcare and doctors themselves are fundamentally public entities. The idea of further ‘purchasing’ them through the ‘Hometown Tax’ system—which effectively privatizes tax revenue—is technically feasible and poses no regulatory issues. However, when asked whether this is ethically desirable, I cannot help but have serious doubts.”

Professor Yoshihiro has long pointed out that the “Hometown Tax” system amounts to a divestment of public services. At the core of this is healthcare.

“Moreover, the funding comes in two forms.”

So, can healthcare be excluded based on the criteria for local specialty products?

“To argue that the lodging industry is acceptable but healthcare is not, we would have to establish criteria separate from the value-added ratio. At this point, I can’t think of a way to make that possible.”

The next target is “high-cost cosmetic medical procedures.”  

The system has put the brakes on rising costs. The fiscal year ’26 tax reform introduced a 1.93 million yen cap on special resident tax deductions, effective for donations made in fiscal year ’27. The maximum deductible donation amount is approximately 4.38 million yen.

“Since a cap has been set, it should effectively become impossible to offer, say, 1.5 million yen worth of medical services in exchange for a 5 million yen donation.”  

Donations themselves are still possible, but any amount exceeding the cap must be paid out of pocket. The problem lies in the lower price range.

“The key point is the range of 1 million yen or less—the kind of thing people feel is too expensive to pay out of pocket. When I looked into it, there were quite a few cosmetic surgery procedures, and the costs were high. I think we’ll see more of those going forward.”

Bypassing Rural Areas? Money Flowing Between Cities  

Another point to note is the flow of money. Under the “Hometown Tax” system, donations can only be made to municipalities other than the one where the donor resides.

“The outflow of Hometown Tax donations originates from urban areas such as Tokyo, Aichi, and Osaka. Cosmetic surgery and similar services are also concentrated in urban areas. If this trend continues, it will result in money simply circulating from one urban area to another.”

Regions that work hard raise donations and develop. That is the official premise of the system.

“If medical care becomes a core component of the thank-you gifts, might we see outcomes different from what the system originally envisioned?”

On the other hand, there are reasons why rural areas rely on medical services.

“The regional economy is supported by healthcare and public services. In areas where the construction industry has disappeared and there are no jobs, healthcare and long-term care are what maintain added value. Once they realize they can generate revenue from these as return gifts, they’ll naturally want to offer them.”

Medical institutions have their own circumstances as well.

“Hospital finances have rapidly deteriorated since the pandemic.Since medical reimbursement rates do not fully reflect rising prices, some are actually beginning to go out of business. It’s conceivable that they might decide to offer private medical services to stay afloat. However, private medical services are typically sought by those with financial means. Regions with financially struggling hospitals don’t have many such residents. There may actually be a surprisingly large number of hospitals looking to tap into demand in urban areas.”  

Local Patients Put on the Back Burner? The Trap of Strained Healthcare Resources

Medical resources are limited.

“We’re forced to allocate the 100 units of resources we currently have to patients coming from outside the area. Since there are only 24 hours in a day, this can eat into the time available for regular insurance-covered care. There’s a real risk that people living in the area who are genuinely ill will suffer as a result of overcrowding.”

Some internal medicine clinics also offer comprehensive health screenings, dental care, and weight-loss medications or IV drips. If these are included as return gifts, people will come from nearby urban areas.

“There’s no doubt that this is drawing on local medical resources. This raises the question of whether this is the right way for public services to operate.”

The barrier of current rules that make it impossible to exclude medical services  

Will regulations be imposed?

“The Hometown Tax system has continued by sweeping problems under the rug after they arise. If an issue is identified, it wouldn’t be unusual for the program to be shut down starting next year.”  

However, exempting medical services alone is not easy.

“The only option would be to impose a blanket ban, stating, ‘Anything based on laws governing medical practices is prohibited.’ That, in itself, is expected to spark backlash, because there are no other high-value alternatives to replace them.”

Local governments have an incentive to seek high-value return gifts.

“It’s more efficient to receive 100 donations of about 1 million yen each than to collect many small donations. It’s no surprise that some regions are turning their attention to medical services as they search for items that can be sold at high prices.”

Medical care exists at a certain standard in every region and is also a service that is self-contained within the region.

“It poses absolutely no problem under the Ministry of Internal Affairs and Communications’ designation system. One could even view these return gifts as a natural byproduct of stricter regulations and Japan’s public healthcare network.”  

The Downfall of the “Do It or Lose” System

It’s not simply a matter of local governments exercising self-restraint. Asking urban areas to stop is tantamount to telling them to abandon rationality.

“If there are two people—one who participates and one who doesn’t—the one who doesn’t participate is bound to lose. In a game where you know you’ll lose, you have no choice but to decide to participate yourself. The more rational you are, the more you conclude you should participate.”

As for the system as a whole, it actually tends to reduce the amount of money flowing to local areas.

“It inevitably works to slightly reduce the total amount of money available to local communities as a whole. However, since the pain is spread thinly and widely, and only the ‘winners’ stand out, it appears as though it’s better to participate.”

In an interview three years ago, Professor Yoshihiro described the “Hometown Tax” program as an act of “eating into the future.” His view remains unchanged.

“Either set the value of thank-you gifts extremely low, or impose a cap on donation amounts. In other words, there’s no choice but to make the Hometown Tax Donation program unpopular. However, as things stand, there’s very little incentive to steer the system in that direction.”

Nevertheless, he added that there is still value in getting this information out.

“Information warning that negative consequences will emerge in three or five years doesn’t really reach people. Because it doesn’t reach them, it’s treated as if it doesn’t exist, while the narrative that the system is for the better gets amplified. It’s important to keep saying that the path the ‘Hometown Tax’ program is taking doesn’t necessarily lead to a happy future.”

Returning to Tsukuba City’s response: While the city offers return gifts, it states it has no intention of expanding the program and acknowledges that it is difficult to position it as a service unique to the city. The local government itself understands better than anyone that this program began as a loophole in the system.

▼ Kensuke Yoshihiro: Professor, Faculty of Economics, Momoyama Gakuin University. Born in Nagano Prefecture in 1980.Graduated from the Faculty of Economics at Hosei University in 2002; withdrew from the doctoral program at the University of Tokyo in 2007 after completing the required coursework, holding a Ph.D. in Economics. After serving as an associate professor at Shimonoseki City University and the Faculty of Economics at Momoyama Gakuin University, he has held his current position since October 2021.His publications include *An Analysis of the Osaka Ishin no Kai: The True Nature of “Fiscal Populism”* (Chikuma Shinsho, 2024) and *Changes in Industrial Structure and Tax Policy in the United States* (Nakanishiya Publishing, 2024).