What will happen to the NISA expansion?

October 4, 20:41

Discussions on NISA expansion have started.

At a meeting on October 4, the Government Tax Commission discussed the expansion of the NISA, a tax incentive system that supports individual asset management.

NISA is a tax exemption system for profits and dividends obtained by investing in stocks and investment trusts.

The Financial Services Agency is considering a drastic reform of the system, and in its request for tax reform next year, it is calling for a permanent system and an expansion of the tax exemption limit.

Perpetualization of the system has been postponed four times so far, but will this fifth request change NISA?

(Kentaro Makata, Taichi Yokoyama, Reporters, Economic Affairs Department)

*The article published on September 14th has been updated to reflect the latest trends.

Prime Minister Kishida declares “Drastic expansion of NISA”

Prime Minister Kishida

said, "We will boldly and radically promote the shift from savings to investment, and realize a 'doubling of asset income' through investment. To that end, we will drastically expand the NISA and create a new mechanism that guides individual deposits and savings to asset management. We will mobilize all policies, such as the establishment of a

In May, Prime Minister Kishida gave a lecture in London's financial district, The City, and made the following remarks.

The background to his remarks is that the financial assets held by Japanese individuals are heavily concentrated in deposits.

In Japan, household financial assets amount to approximately 2,000 trillion yen, of which deposits and savings account for more than half.

Over the past 20 years, financial assets have increased 3.4 times in the United States and 2.3 times in the United Kingdom, but remain at 1.4 times in Japan.

Prime Minister Kishida also said, "I'm going to have you work to wake up the dormant deposits and savings and revitalize the market."

He declared that a drastic expansion of NISA would create a flow from savings to investment.

After hearing what Prime Minister Kishida had said, the Financial Services Agency took it with surprise.

“I heard he was going to give a talk, but I didn't think he would go this far,” said one executive.

Among the enhancements to the NISA, the "permanent" plan, which removes restrictions on the period during which investments can be made, has been proposed by the Financial Services Agency four times as a request for tax reform from fiscal 2017 to fiscal 2020, but none of them has been approved. .

The Prime Minister's remarks were seen as a great opportunity for the Financial Services Agency and industry groups to realize the expansion of NISA.

Since then, the Financial Services Agency has held numerous meetings with the person in charge of the Comprehensive Policy Division as well as the Commissioner, in preparation for the deadline for requesting tax reforms at the end of August.

A high-ranking official commented, "Until now, the north wind has suddenly changed to the south wind. Given that this is an important policy for the government, we will approach it with even greater determination than before." was

As a result, we decided not only to make it permanent, which had not been approved until now, but also to fundamentally revamp the system itself, and put together a plan at a rapid pace.

The person in charge said that he felt twice as busy as usual.

The point of expanded NISA is

In August, the Financial Services Agency announced plans for a new NISA system.

The slogan of the new system is to make it simple, easy to understand, and user-friendly.

There are currently three types of NISAs.

▽ “General NISA”

▽ “Tsumitate NISA”

▽ “Junior NISA”

Under the new system, these will be integrated.

This is because there are differences in the investment period, the annual investment limit, and the products that can be invested.

In designing the system, we will base it on the “Tsumitate NISA,” which has a particularly large number of users, especially among the younger generation.

In addition to making the system permanent, we are also calling for an indefinite tax-exempt holding period and an expansion of the annual investment limit.

discussion start

Discussions on NISA expansion began on October 4 at the Government Tax Commission.

At the meeting, the topic of income tax was discussed, during which a Ministry of Finance official explained points of contention regarding the expansion of the NISA.

Regarding this, members of the committee expressed the opinion that the tax-exempt holding period should be longer so that the younger generation can easily use it, and if the upper limit of the amount that can be purchased is raised, it will give preferential treatment to the wealthy. It was also pointed out that there was no such thing.

The biggest focus is "permanence"

From now until the end of the year, the ruling party's tax system research committee will be the center of discussion, but the biggest focus will be on whether the system will be "permanent."

Prime Minister Kishida made the following remarks in his speech at the New York Stock Exchange on September 22nd.

Prime Minister Kishida

said, "In order to double asset income and enable long-term asset building for old age, it is essential to make the small investment tax exemption system for individuals (NISA) permanent."

The Financial Services Agency takes it as an incentive to make the system permanent.

Even with the current NISA, which allows for the longest investment period, Tsumitate NISA, the expiration date is until 2042.

However, it has been pointed out that if a time-limited measure is left in place, people will be conscious that the system will end eventually, making it difficult to make long-term investments.

If this is made permanent, it will become easier to make long-term and diversified investments that are important for asset formation.

However, despite the FSA's request to make it permanent four times in the past, it was not approved.

A finance ministry official said:

Ministry of Finance official

: “NISA is exempt from taxation because it is implemented to promote investment as a special tax law based on the Act on Special Measures Concerning Taxation. As a time-limited system, we should discuss reviewing it every time the deadline comes.”

On the other hand, the Financial Services Agency points out the following in line with Prime Minister Kishida's remarks of "dramatic expansion of NISA."

A senior official of the Financial Services Agency

said, "The key point is the prime minister's remarks about drastic measures. We have already extended the period and reviewed the system, but by making it permanent, it will become a user-friendly "drastic expansion." Isn't it

Is the expansion of the investment limit and the tax exemption limit a preferential treatment for the rich?

Another point is how much the annual investment quota and tax exemption limit should be expanded.

If it expands too much, it may invite criticism that it is "preferring the rich."

The Ministry of Finance is also cautious about increasing the limit.

The current tax exemption limit for Tsumitate NISA is 8 million yen, but according to the "National Household Structure Survey" conducted every five years by the Ministry of Internal Affairs and Communications, the median value of financial assets per household is 6.5 million yen (2019). year).

Even if everything is managed with NISA, the maximum amount will not be reached.

In other words, there are few households that can invest up to the upper limit even at the moment, and it seems that expansion is not necessary.

Ministry of Finance official:

"If the limit is raised, the wealthy will receive more preferential treatment."

A person in charge of the Financial Services Agency said,

"It is difficult for families with children to invest up to the limit, but for households who have settled down to raise children or who have received retirement benefits, if the limit is increased, it will be easier to use."

Will there be a shift from savings to investment?

Sluggish wages, sharp rises in prices, and anxiety about life after retirement.

Amidst endless worries about money, interest in investment and asset building is increasing, especially among the younger generation.

According to the Financial Services Agency, the number of NISA accounts increased by about 20% in two years to 16.99 million as of the end of March this year.

In particular, the number of accounts opened by people in their 20s and 30s is increasing.

Under these circumstances, will the drastic expansion of the NISA trigger a shift from savings to investment?

Attention is focused on the response of the entire government based on the FSA's fifth request.

Economics Department Reporter

Kentaro MakataAfter

working at the Obihiro, Takamatsu, and Hiroshima offices, he has

been in charge of the Financial Services Agency since August.

Taichi Yokoyama ,

Reporter, Economics Department

After working at the Toyama, Kofu, and Takamatsu offices, he is currently working at the

Ministry of Finance, reporting on taxes since August.