Japan seeks doubling tax-free stock investment

TOKYO Japanese government on Friday called for doubling the tax-free stock investment programme for households to encourage savers to put more money in riskier assets rather than in cash and savings accounts.

The number of accounts in the Nippon Individual Saving Account NISA program is going to double to 34 million and the amount of investment to 56 trillion yen $404 billion over the next five years.

Those who invest up to 1.2 million yen $8,600 annually can only invest in stocks and investment trusts. The accounts offer a five-year tax exemption on returns.

The programme is part of Prime Minister Fumio Kishida's new capitalism scheme to boost average household wealth and asset holdings, which has moved emphasis to investment after an early proposal to review the country's capital gains taxes failed to gain traction.

Kishida has also taken his Japan investment campaign abroad, telling bankers and investors in the City of London in May this year that Japan is a buy. Japanese households have more than half of their 2,000 trillion yen in financial assets as cash and savings accounts.

In the United States and Britain, where households invest more of their assets in stocks and investment trusts, financial assets have gone up by 3.4 times and 2.3 times over the last 20 years, while they have gone up only 40 per cent over the last 20 years.

The proposal was presented to a panel meeting on Friday and aims to reflect on the proposals in Japan's annual tax reform plan to be compiled at the end of this year.

The proposals include making NISA a permanent program and raising the upper limit for investment.

The task force urged reforms for individual defined contribution pension plans - known as iDeCo - including raising the age limit for enrolling in the scheme.