Key Facts
• October 9, 2025: Osaka High Court ruled tax reduction illegal.
• Izumisano City collected ¥49.7 billion in donations in 2018.
• Ministry of Internal Affairs reduced special allocation tax by ¥440 million in 2019.
• March 2022: District Court ruled reduction exceeded legal scope.
• February 2023: Supreme Court allowed lawsuit over special allocation tax.
• Special allocation tax supports municipalities facing financial shortages.
Summary
The Osaka High Court ruled on October 9, 2025, that the Japanese government’s reduction of Izumisano City’s special allocation tax was illegal. The city, which raised ¥49.7 billion in 2018 through the hometown tax donation system, faced a ¥440 million reduction in 2019 after the Ministry of Internal Affairs revised regulations. The court upheld a 2022 district court decision, stating the reduction exceeded legal boundaries. This case highlights the legal complexities surrounding Japan’s tax allocation policies.
