Photo/Illutration A brokerage company's outlet in Tokyo's Chuo Ward promotes the tax-free small-sum savings account system for investment returns. (Asahi Shimbun file photo)

"Doubling of asset incomes," which recently has become Prime Minister Fumio Kishida's favorite slogan, undeniably points to the preservation of shareholder-primacy capitalism and thereby expanding the wealth gap.

This calls for close scrutiny, as it runs counter to his economic policy at the start of his administration.

Kishida said in a speech he gave in London last month, "I will promote a bold and fundamental shift from savings to investment, in order to double people’s incomes from asset investments."

He also stated in the action plan to realize his new form of capitalism, approved by the Cabinet on June 7, that he will draw up a "comprehensive plan for measures to double asset incomes by the end of this year."

Although the plan's specifics have yet to be decided--such as by when the doubling will be realized--Kishida said he is considering expanding NISA (Nippon Individual Savings Account), a tax-exempt system introduced in 2014 for small-sum investments.

In Japan, more than 50 percent of all household financial assets are in cash and savings, and the ratio of stock assets is much lower than in Europe and the United States. This reflects the structural reality in Japan where the public at large hardly ever benefited from rising stock prices.

Amid the steady aging of the population and the low birthrate, public pension payouts are expected to shrink, as the system relies heavily on premiums paid by the working-age generation.

For this reason, we do not refute the need per se of assisting households to build their assets to supplement their incomes.

However, we must not forget that many households do not have money for investing and that not everyone has the same level of investment knowledge.

A survey by the Central Council for Financial Services Information found that 33 percent of single-person households and 22 percent of households with two or more members had no financial assets they could spare for investment.

And according to a Financial Services Agency survey of people who have never invested and why, the top two reasons were "I don't have surplus funds" (39 percent) and "I don't know anything about investments" (19 percent).

Given this situation, introducing an excessive tax break or any other incentive to encourage investment may well aggravate the present asset income gap or result in many people making bad investment decisions and paying dearly for them in their old age.

The first thing that needs to be done is to raise wages to increase household incomes and simultaneously provide better financial education to all. The government must get their priorities straight.

While campaigning for the Liberal Democratic Party presidency, Kishida advocated "the Reiwa version of doubling incomes" and called for a redistribution of wealth through stiffer taxes on investment income.

So, why has he shifted his policy to "doubling asset incomes" with a tax break for investors?

If he thinks that luring massive amounts of personal financial assets to the stock market will raise stock prices and lead to a higher approval rating for his Cabinet, he is being irresponsibly naive.

His campaign pledge to bring about a "transition from shareholder-primacy capitalism" through his "new form of capitalism" may well end up as just an empty slogan.

Should his administration give its official blessing on measures to push up stock prices and increase dividends to stockholders, Kishida will no longer be able to persuade corporations to be mindful of not only their shareholders but also their workers, business partners, the environment and the well-being of society at large.

We renew our firm demand that the prime minister return to his initial commitment to correcting the unequal distribution of wealth and income.

--The Asahi Shimbun, June 15

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