Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Friday, December 9, 2016, 9:16 am to 9:33 am)

[Questions and answers:]

Q.

Yesterday the Research Commission on the Tax System of ruling party wrapped up an outline of tax system reform proposals for fiscal 2017. Included in this outline was a proposal for establishing a new savings-type NISA that would extend the tax-free period to 20 years, substantially beyond that of the current NISA. What effects do you anticipate this would have?

A.

Personal financial assets now total about 1,760 or 1,790 trillion yen, of which more than 900 trillion yen is kept in cash and deposits and not earning interest. This is the biggest issue Japan faces at the moment. As is true for corporations, a great amount of money in personal financial assets is also kept in cash and deposits. It is important that these funds were properly circulating, but when this program was first launched, people were saying that it was difficult to tell the difference between speculation and investment. We began NISA thinking that we needed to promote a savings-type plan allowing small installments and diversified investments for such people, and we’re aware that a recommendation to extend the savings period to 20 years has been newly incorporated into the outline. Household savings basically do not earn any interest when deposited. Have you ever calculated how much savings you would need in an ordinary deposit account to earn 10,000 yen in interest? It would take over 1.2 billion yen. Because 20% of interest is deducted in taxes, it would take 1.2 billion yen to earn that with ordinary savings. This is a fact. Since fees are also charged for withdrawals, some people will decide along the way that this just will not work out. In seeking to steadily build up assets with their household savings, they discover that expenses, labor costs, and fees will be charged for any withdrawals, so they keep the money “under the mattress,” so to speak, by putting it in a jar or locking it in a safe at home. NISA offers one option for steadily building up assets by small amounts, and we think we should proceed with this approach, bearing in mind the arguments offered by the ruling party.