Policy Statement by Taro Aso, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors
March 7, 2017
I am Taro Aso, Minister of Finance and Minister of State for Financial Services. To start this meeting of the committee, I will present my key policy directions on fiscal policy, financial administration, and other affairs at this committee.
(Current state of the Japanese economy and basic approach to fiscal policies)
Concerning the current state of the Japanese economy, efforts made by the Abe Cabinet have created a positive cycle of the economy, with the employment and income situation steadily improving, for example. To reinforce the positive cycle, we will further accelerate Abenomics by mobilizing monetary policy, fiscal policy and structural reforms.
In order to realize a society in which all citizens are dynamically engaged, we will promote a growth strategy toward expanding investments for the future. At the same time, we will enhance the potential growth rate in order to tackle the issues of an aging society with a low birth rate by promoting environmental improvements for childcare and nursing care.
With respect to the severe fiscal condition, in order to maintain fiscal sustainability, we will strengthen the ongoing expenditure and revenue reforms in line with “The Plan to Advance Economic and Fiscal Revitalization” and the roadmap for reforms with a view to achieving the goal of bringing the primary balance into surplus by FY2020.
(Summary of the budget for FY2017 and outline of the tax and tariff system revision)
Next, I will explain the outline of the budget for FY2017 and the tax system revision.
As FY2017 is the second year of “The Plan to Advance Economic and Fiscal Revitalization,” the budget for the year is intended to realize economic revitalization and fiscal consolidation simultaneously while appropriately dealing with important challenges for the moment.
Specifically, in order to realize a society in which all citizens are dynamically engaged, we will make sure to implement such major initiatives as improving the wages of childcare workers and long-term nursery workers and establishing a grant-type scholarship program. We will increase expenditure related to science and technology and implement initiatives that directly lead to economic revitalization, including prioritization of growth fields in the allocation of expenditure related to public works. From the perspective of securing the safety and security of the people’s lives, we will also strengthen the coast guard system and enhance the information-gathering and response capabilities in preparation for possible acts of terrorism.
As for the tax reform for FY2017, in order to raise the Japanese economy’s growth potential, we will revise the spouse deduction so that there will be no need to be concerned about the working hour adjustment. We will also revise the research and development tax system and tax credit for the Income Expansion intended to encourage wage hikes from the perspective of promoting the virtuous economic cycle.
In addition, we will carry out liquor tax reform from the perspective of restoring fairness in tax burden among different kinds of liquors. We will also revise the CFC (controlled foreign company) rules in order to address international tax avoidance in an effective manner without impeding Japanese companies’ overseas business operation.
Furthermore, we will introduce special cases related to disasters.
(Basic concepts on the current financial regulatory policy)
Next, I would like to elaborate on the current financial regulatory policy.
To firmly establish a virtuous economic cycle, we will take various initiatives.
For strengthening financial intermediary function, we will review the monitoring approaches to change the impression of the Financial Services Agency from the Financial Sanctions Agency to the incubator of financial business.
Also, for further effective financial intermediation, we will conduct in-depth dialogue with financial institutions regarding their initiatives improving corporate productivity and revitalizing local economy.
Moreover, for the realization of stable household asset building, we will promote long-term, cumulative and diversified investment starting from a small amount, and encourage financial institutions to take initiatives toward customer-oriented business conduct.
Furthermore, the FSA will develop a regulatory framework for responding to advances in information technology, ensuring market credibility, customer protection and the global competitiveness of Japan’s financial services.
In addition, we will strive to ensure that the global financial regulatory reforms aim to attain both sustainable growth and financial stability.
Japan's financial system as a whole is sound and stable at present, and we will, with vigilance, keep a close watch over the impact of domestic and international economic developments and market trends on Japan's financial system.
(Bills to be submitted to the extraordinary Diet session)
The bills which we will ask you to deliberate on, related to the Ministry of Finance, is the Bill for Partial Revision of the Income Tax Act, etc., the Bill to Partially Amend the Customs Tariff Act etc., and the Bill to Partially Amend the Act on Measures Accompanying Accession to the International Development Association.
Also, the bills related to the Financial Services Agency are the Bill to Partially Amend the Financial Instruments and Exchange Act, and the Bill to Partially Amend the Banking Act, etc.
We will explain the details of these bills later, so I hereby ask you to deliberate on these matters and give your approval.
*Titles of the bills are provisional translations based on their Japanese titles.
In this speech, I have stated my ideas relating to fiscal policy, financial administration, and other affairs. I am determined to continue, with your support, to do my best in policy management. I would appreciate the understanding and cooperation of Chairman Fujikawa and all other members of the committee.
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