(Provisional translation)

Policy Statement by ASO Taro, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors

March 5, 2020

Policy Statement by ASO Taro, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors

(Introduction）

　I am ASO Taro, Minister of Finance and Minister of State for Financial Services. To start off this meeting of the committee, I will present my key policy directions on fiscal policy, financial sector policies, and other affairs at this committee.

(Current state of the Japanese economy and basic approach to fiscal policies)

　The Japanese economy has been recovering at a moderate pace, mainly driven by domestic demand reflecting an improvement in the employment and income situation and strong corporate earnings, despite weakness in external demand due to a slowdown in overseas economies. On the other hand, Japan was hit by a series of natural disasters last year, which caused severe damage across wide areas. There are also various uncertainties, including the situation surrounding trade issues, which makes it important to be mindful of downside risks originating from overseas economies.
 
　With this awareness of economy, on December 5, 2019, the Cabinet approved “Comprehensive Economic Measures to Create a Future with Security and Growth,” which includes 13 trillion yen in fiscal spending. These comprehensive economic measures were aimed at overcoming economic downside risks and generating sustained economic growth led mainly by domestic demand through improving productivity and growth potential, in addition to accelerating the restoration and reconstruction from the natural disasters.
 
　It is also important to continue to maintain fiscal sustainability in order to fulfill our responsibility to pass on to the next generation a social security system that provides people with peace of mind at a time when social security benefit expenses are dramatically growing because of the rapid aging of society. Based on the New Plan to Advance Economic and Fiscal Revitalization, we are striving to simultaneously generate a primary balance surplus in FY2025 and steadily lower the outstanding government debt to GDP ratio.
 
　Furthermore, we will continuously implement all possible measures for economic and fiscal management, paying careful attention to the impact of COVID-19 on the economy.

 (Outline of the budget and tax reform for FY2020)

　Next, I would like to provide an outline of the budget and tax reforms for FY2020.
 
　As for the budget for FY2020, we will implement measures to enhance social security, including steadily working to make preschool education and nursing free-of-charge, making higher education free–of-charge, and prompting work-style reforms for medical practitioners, in order to build a social security system for all generations, using the increase in tax revenue brought about by the consumption tax rate hike. In addition, as temporary and special measures to implement comprehensive economic measures, we will implement the Reward Point Program for Cashless Payments, measures based on the individual number (colloquially known as “my number”) card system to stimulate consumption, a three-year emergency response plan for disaster prevention, disaster mitigation, and building national resilience, and so on.
 
　At the same time, overall expenditure is being reviewed, and efforts will continue to be made to reform general expenditure, which includes achieving the goals set forth in the New Plan to Advance Economic and Fiscal Revitalization.

　Through these initiatives, we will work to achieve economic revitalization and fiscal consolidation simultaneously.

　As for the FY2020 tax reforms, we will implement tax measures to promote open innovation and encourage investment and wage increases, as well as overhaul the consolidated tax regime in order to generate sustainable economic growth. Taking into consideration the structural changes in the economy and society, we will not only create a tax system that is fair to all children of single-parent households but also review the NISA system. In addition, we will create an environment for the smooth and proper payment of taxes.

(Basic concepts of current financial sector policies)

　We will continuously strive to change the impression of the Financial Services Agency (FSA) from the Financial Sanction Agency to the Financial Nurturing Agency with due consideration to various users.

　In light of the acceleration of digitalization, we will develop regulatory frameworks for financial services intermediation and payment. In terms of global policy discussion, we will contribute to initiatives to tackle the issues associated with financial innovation, including crypto-assets. Through these initiatives, we will work on promoting financial innovation with due consideration to customer protection.

　Moreover, aiming to build stable assets, we will comprehensively advance initiatives, including the promotion of financial education and diffusion of “NISA.” We will also encourage financial institutions to enhance initiatives towards customer-oriented business conduct and realize a virtuous circle of fund flows contributing to households' asset building.

　Furthermore, with respect to our initiatives to maintain the long-term soundness of Japan’s financial system and to enhance financial intermediation amid the evolving financial environment, we will engage in in-depth dialogues with each level of personnel and external directors of financial institutions on company-wide sharing of corporate visions, the implementation of business strategies, and practice of governance. In addition, we will monitor inappropriate solicitation practices of insurance products by Japan Post Insurance Co., Ltd., given the recent administrative action.

(Bills to be submitted to the ordinary Diet session)

　The bills which we will ask you to deliberate on, related to the Ministry of Finance, are the Bill for Partial Revision of the Income Tax Act, etc., the Bill to Partially Amend the Customs Tariff Act etc., the Bill to Partially Amend the Law for the Measures in Consequence of Admission to the International Finance Corporation and the Law for the Measures in Consequence of Admission to the International Development Association, and the Amendment Bill of the Development Bank of Japan Inc. Act.

　Moreover, the bill related to the Financial Services Agency is the Amendment Bill of the Act on Sales, etc. of Financial Instruments, etc. for the Purpose of Improving Convenience for Users of Financial Services and Protecting Them. That brings the total to five bills.
　We will explain the details of these bills later.

(Conclusion)

　In this speech, I have stated my ideas relating to fiscal policy, financial sector policies, and other affairs. I am determined to continue, with your support, paying attention to the economic situations in Japan and around the world, to do my best in policy management.
　I would appreciate the understanding and cooperation of Chairman Nakanishi and all the other members of the committee.

(End)