Press Conference by Tadahiro Matsushita, Minister for Financial Services
(Friday, August 31, 2012, from 9:26 a.m. to 9:44 a.m.)
[Questions & Answers]
I have two questions. First, could you explain the key points of the Financial Services Agency's (FSA's) request related to the fiscal year 2013 tax reform, the draft of which I understand has been finalized?
Regarding the request related to the fiscal year 2013 tax reform, we are still doing the finishing touches, so I cannot mention details. However, in light of the Comprehensive Strategy for the Rebirth of Japan, which was adopted upon a cabinet decision on July 30, we are considering requesting the introduction of the Japanese version of the ISA (Individual Savings Account: tax exemption for dividend income and capital gains related to small-amount investments in listed stocks) as a permanent measure and a fundamental review of the financial and securities tax system, which promotes the unification of financial income taxation. We are also considering requesting support for the rehabilitation of small and medium-size enterprises (SME) against the background of the expiration of the SME Financing Facilitation Act at the end of the fiscal year 2012. These will be the centerpieces of our request.
As for the specifics of our request related to the fiscal year 2013 tax reform, the FSA staff will provide appropriate explanations to you after the submission of the request. We will flesh out the request further by the submission deadline of September 7. I would like you to wait for a while for our explanations.
At yesterday's meeting of cabinet ministers on overcoming deflation, I explained the FSA's activities and approach to tax systems that I mentioned.
Let me move on to the next question. On August 29, the House of Councillors adopted a censure motion against the Prime Minister. Just ahead of the end of the current Diet session, some people say that the Diet is in a state of malfunction. Could you offer your thoughts on the prospect for the enactment of the bill to amend the Financial Instruments and Exchange Act (FIEA)?
The day before yesterday, the bill to amend the FIEA was adopted by the House of Representatives' Committee on Financial Affairs. While members of the Liberal Democratic Party abstained, members of other parties, including the ruling and opposition parties, participated in the vote. The bill has yet to be passed in a plenary session of the House of Representatives, but let me remind you that the FSA is continuing to make every effort to ensure the enactment of the bill.
I would like to ask you about the preferential tax treatment of securities investment income, which has been extended several times. What is your approach to it in the forthcoming tax reform and what is the reason for such approach?
The tax rate on dividend income and capital gains from investment in listed stocks has been reduced to 10% as you know. In the fiscal year 2011 tax reform, this measure was extended for two years to ensure economic recovery. On that occasion, it was decided that the tax rate should return to the original rate in January 2014 unless the economic and financial situations change dramatically, as you know. As for the fiscal year 2013 tax reform, the introduction of the Japanese version of the ISA will come at the same time as the return of the tax rate to the original rate of 20% in January 2014, and we are considering requesting to make it a permanent measure. We are also considering requesting another extension of the reduced tax rate if the economic and financial situations change drastically, as specified in the tax system reform guideline for fiscal year 2011.
As the submission deadline arrives on September 7, we are working on the details.
Regarding the preferential tax treatment of securities investment income, the tax rate will return to the original rate unless the economic and financial situations change dramatically. At a time when stock prices (as measured by the Nikkei Average) are slumping at around 8,000, what degree of economic and financial shock would be a “dramatic change”?
I would not mention specific figures or circumstances that may be regarded as a dramatic change. However, we continue to face a very harsh environment, such as various financial and fiscal problems in Europe, the weak economic conditions and the trade deficit, as you know. While keeping a close watch on the situation, we are hoping that a dramatic change will not occur. We must take action while taking account of this harsh severe environment, so we will remain alert.
I will appreciate your support for the enactment of the amended FIEA.
Thank you very much.
- About FSAPage list
- Ministerial Team
- Annual Reports
- Financial Policies Monitor
- Laws & RegulationsPage list
- Name of Laws and Regulations(PDF)
- Financial Instruments and Exchange Act
- Recent Changes
- Public Comment
- No Action Letter System
- PrinciplesPage list
- Strategic Directions and Priorities
- Progress and Assessment of the Strategic Directions and Priorities
- Policy Approaches to Strengthen Cyber Security in the Financial Sector
- Financial Monitoring Policy
- AnnouncementsPage list
- Press Conferences
- Press Releases
- Official Statements
- Great East Japan Earthquake-Related Information
- The Earthquake Centered in the Kumamoto Region of Kumamoto Prefecture 2016-Related Information
- List of Institutions
- To Operators of Specially Permitted Businesses for Qualified Institutional Investors, etc.