(Provisional translation)

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 Representatives

February 15, 2019

 I am Taro Aso, Minister of Finance and Minister of State for Financial Services. For starting 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)

 The Japanese economy is in a continuous moderate recovery, with a virtuous circle progressing, in which improvement in the corporate sector is spreading to the household sector. In this situation, the duration of the current economic recovery may have marked the longest in the postwar era as of January this year.
 Under these circumstances, it is necessary to continue to make steady efforts to achieve economic revitalization and fiscal consolidation. The key to doing that is dealing with the declining birthrate and aging population. As part of efforts to do that, it is important to establish a social security system oriented to all generations and secure its sustainability. From this viewpoint, we will implement expenditure reform in line with the New Plan to Advance Economic and Fiscal Revitalization and also secure a stable source of funds by raising the consumption tax rate in October this year.
 In preparation for the consumption tax rate hike, we will do our utmost, making every effort to ensure continued economic revitalization, including implementation of reduced tax rate schemes for low income earners and sufficient measures for smoothing out demand fluctuations.
 While the global economy continues to recover moderately, there are also downside risks. In this situation, this year, Japan will hold the G20 meeting of finance ministers and central bank governors for the first time. We will lead active and constructive discussions toward establishing the foundation for realizing sustainable and inclusive growth of the global economy by taking advantage of the opportunities as the chair country.

 (Outline of the budget and the tax reform for FY2019)

 Next, I will explain the outline of the budget and the tax reform for FY2019.
 Under the budget for FY 2019, we seek to enhance social security, promoting a shift to a social security system oriented to all generations, by using a tax revenue increase due to the consumption tax rate hike.
 Furthermore, in addition to ordinary budget measures, we will implement “temporal and special measures” in order to even out any change in demand due to the consumption tax rate hike. As part of the measures, we will respond to “disaster prevention, disaster mitigation, and building national resilience.”
 Meanwhile, the budget is intended to achieve economic revitalization and fiscal consolidation simultaneously by continuing expenditure reform efforts in line with the principle of the New Plan to Advance Economic and Fiscal Revitalization and by reducing the amount of newly-issued Japanese government bonds for the seventh consecutive year since the inauguration of the Abe Cabinet.
 As for the tax reform for FY2019, in preparation for the consumption tax rate hike, we will implement support measures for housing and automobiles from the viewpoint of smoothing out demand fluctuations. At the same time, in order to overcome deflation and secure economic revitalization, we will revise the research and development taxation system.
 In addition, we will also revise domestic laws related to the international taxation system in order to address international tax avoidance in an effective manner and take measures to enhance compliance in view of the diversification of economic transactions, etc.

 (Basic concepts of current financial regulatory policies)

 Next, I will elaborate on current financial regulatory policies.

 To secure a virtuous economic cycle, we will respond appropriately to challenges such as the acceleration of digitalization, and will continuously strive to change the impression of the “Financial Services Agency” from the Financial Sanction Agency to the incubator of financial businesses.
 We will carefully monitor both domestic and international economic conditions and financial markets to maintain the long-term soundness of Japan’s financial system and to facilitate financial intermediation amid the evolving financial environment. We will also communicate closely with the management teams of financial institutions on the appropriate planning and implementation of business strategies and on the practice of governance. In addition, we will step up our efforts to inspect and monitor financial institutions dealing with loans for purchasing investment property, from the perspective of customer protection.
 With the advent of the era of 100-year life society, we will work toward supporting the efforts of households to build and utilize stable assets over the course of their lives by improving financial literacy through financial education and will comprehensively promote measures including the diffusion of the of “TSUMITATE NISA (Dollar-Cost Averaging NISA)”, which is aimed at encouraging households to enroll in long-term, installment-based and diversified investments starting with small amounts. We will also encourage financial business operators to take initiatives towards customer-oriented business conduct, and deliberate on how to develop desirable financial services for the aging society.
 Furthermore, we will continue to develop institutional infrastructure for finance to improve the credibility of financial functions and to protect customers, responding to the diversification of financial transactions due to advances in FinTech.
 Moreover, in terms of global policy agendas, as the host of the next G20 summit, we will take the initiative to solve new challenges common at home and abroad, sharing knowledge and information with other countries.

 (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 and the Temporary Tariff Measures Act and the Bill to Partially Amend the Law for the Measures in Consequence of Admission to the International Monetary Fund and the International Bank for Reconstruction and Development
 Furthermore, the bills related to the Financial Services Agency are the Bill to Partially Amend the Act on Emergency Measures for Early Strengthening of Financial Functions and the Bill for the Partial Revision of the Payment Services Act, etc., to Address the Diversification of Financial Transactions Based on Advances in Information Technology.
 We will explain the details of these bills later, so I hereby ask you to deliberate on these matters.


 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 understanding and cooperation of Chairman Sakai and all the other members of the committee.


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