Different fiscal policies have significant differences in their impact on various industries. In 2008, Japan introduced a policy called "hometown tax"(Furusato Nozei), which had a notable effect on income disparity in the textile industry market. This policy utilized the local characteristic gift system-including high-quality textile crafts and agricultural products-to stimulate regional economies. Since the textile industry is a cornerstone of many rural Japanese economies, its revitalization through policy-driven consumption is crucial for balancing regional development. In this paper, the microdata of the 15 years since the implementation of the Japanese hometown tax have been extended by introducing the Theil Index, which has been expanded to study the effect of hometown tax on the income gap in urban and rural areas. The study found that the implementation of this policy regulates the problem of the income gap between urban and rural areas, which is based on the double difference method. This means that the policy or through the problem of reducing urban and rural income is effectively reduced. The results indicate that the fiscal stimulus, often channeled through the promotion of local textile and traditional industries, effectively reduces urban and rural income inequality.

income gap, Theil Index, Japan, Furusato Nozei, textile industry market