Photo/Illutration Prime Minister Fumio Kishida speaks at a May 31 session of a council discussing how to bring about a "new capitalism." (Koichi Ueda)

The draft of the action plan for Prime Minister Fumio Kishida’s “new capitalism” has drawn fire over what critics say are simply “old” ideas.

“There is nothing new because the contents of the action plan lack specifics,” said Yutaka Okada, a chief researcher at Mizuho Research & Technologies Ltd. “There is a need for the prime minister himself to talk specifically about the kind of society that he wants to bring about.”

When he was running for president of the ruling Liberal Democratic Party last autumn, Kishida said redistribution policies were needed to expand the middle class.

He floated the idea of increasing tax rates on wealthier individuals, including on stock holdings, and using that revenue to promote social programs and support those more in need.

But the draft released on May 31 contained no mention about possible higher taxes on investment income.

The draft also featured no specifics on wage hikes during the annual labor negotiations or increasing the salaries of those working in elderly care or child care facilities.

Instead, the draft focused on pushing economic growth through investments in four areas: by individuals; for technology and innovation; in start-up companies; and for green and digital transformation.

The draft said the administration would compile before the year-end a plan designed to double returns on assets by encouraging individuals to move their savings into investment opportunities.

To further encourage investments by individuals, the draft said the government would consider revising the Nippon Individual Savings Account (NISA), a new type of tax-exemption program for small investments, and the individual-type Defined-Contribution pension program (iDeCo), in which subscribers pay fixed monthly premiums and receive benefits based on investment results.

But that move could further widen the gap between the rich and poor because those who most need the redistribution policies have little in the way of savings to invest.

The draft also said a combined 150 trillion yen ($1.2 trillion) would be invested over a 10-year period in a cooperative effort between the public and private sectors for the green transformation needed to move toward a carbon-free society.

Investment in digital transformation is intended to strengthen competitiveness in next-generation communications technology.

One veteran LDP lawmaker said the various proposals to invest in a wide range of sectors is reminiscent of previous LDP moves to appease large parts of society.

“(The draft) seems like a return to traditional capitalism,” the lawmaker said. “While Kishida talked about a ‘new capitalism’ in hinting at an attempt to make a comprehensive change, such an endeavor is impossible.”

The four areas for investment are strikingly similar to the growth strategy compiled last year by Kishida’s predecessor, Yoshihide Suga.

And the framework for fiscal and monetary policy to implement the various measures follows the “three-arrow” approach of Abenomics pushed by Shinzo Abe when he was prime minister.

The arrows are bold monetary easing, flexible fiscal spending and a growth strategy designed to stimulate private-sector investment.

(This article was compiled from reports by Keishi Nishimura and Keiichi Kitagawa.)

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