A government plan to double people’s asset incomes marks a clear departure from Prime Minister Fumio Kishida’s past pledges to reduce inequality, aides and economists have said.
The new plan is centered around promoting investments in financial products such as stocks, in what some see as a shift from Kishida’s emphasis on redistributing wealth and doubling income since he became prime minister in October last year.
“It’s important to expand households’ financial asset income to create a broad middle class,” Kishida said Monday at a government meeting where the new plan was adopted. “We’ll seek a doubling of asset management income.”
The plan features making the NISA small-lot investment promotion scheme permanent, making tax-free periods indefinite and increasing the maximum investment amount.
The government argues that the move will “raise the middle class,” saying that creating an environment making it easier for such people to invest will lead to increased financial asset incomes for households.
The plan also calls for “neutral advisers” who can help those thinking of starting NISA investments to overcome their anxiety and lack of knowledge.
But creating a path to a richer middle class is easier said than done. According to a survey by the Financial Services Agency last year, the proportion of people without investment experience was highest among low-income people. The most common reason given for having no experience was the lack of spare funds, at 57%.
Depending on how much the ruling coalition decides to raise the maximum investment limit, the change to the NISA scheme may primarily benefit the wealthy.
During the leadership election for the ruling Liberal Democratic Party in September last year, Kishida placed the correction of wealth disparities through a positive cycle of growth and distribution at the center of his economic policy.
But his slogan of “income doubling” soon gave way to “asset income doubling,” and mentions of “distribution” were omitted from his parliamentary policy speech last month.
Even some lawmakers close to Kishida have noted his change in tone, with one saying, “He needs to emphasize distribution more, but I have no idea what he wants to do.”
Toru Suehiro, senior economist at Daiwa Securities, said that Kishida’s plan seems to be an expansion of existing policies, and lacks novelty.
Kishida’s initial concept was to increase income by changing the way companies think, “but it seems that not much was done about that, including the issue of distribution,” Suehiro said. He added that the plan is unlikely to have an immediate impact.
Takahide Kiuchi, executive economist at Nomura Research Institute, said, “Wider use of the (NISA) scheme doesn’t necessarily lead to increased stock investments, and the government must raise growth expectations for Japanese companies through a growth strategy.”
Source : TheJapansTimes