The Journal The Authority on Global Business in Japan

Ministry of Finance
To Regain public trust is not easy
With 2020 has come a slogan in a corner of the business cards of Ministry of Finance officials: “Guarding the nation’s trust, and preserving society’s hope for the next generation.”
Use of the slogan, however, is at the discre­tion of each official. Only some have adopted it. Others have been heard to object, saying, “Full efforts at improving compliance and reforming awareness on a ministry-wide basis have yet to be thoroughly carried out.”
In 2018, the ministry was embarrassed by a number of scandals, including the questionable transfer of property by private school operator Moritomo Gakuen, sexual harassment allegations against a previous vice-minister, and the falsi­fication of documents. The new slogan was proposed by the Boston Consulting Group’s Reiko Akiike, whose ministry involvement was approved last year.
Following the string of scandals, the ministry made public in July 2018 that it had launched a “revitalization project.” One of the aims was a 360-degree assessment system of management performance by multiple monitors representing different viewpoints.
This system was introduced on an experi­mental basis, and subordinates were graded at four levels on various criteria, such as acting as a leader and working in a results-oriented manner. Assessments were then conveyed to the individuals concerned with the expec­tation of eliciting improvements.
Unfortunately, numerous problems have arisen. The assessments are made using a simple online questionnaire. One medium-level ministry official said, “Somehow, the assessment choices come across as being innocuous.”
Others feel that the vice-ministers and bureau head should be assessed, but no one has been accorded the authority to perform assessments on such high-ranking officials.
It is likely to be a while yet before the ministry regains the public’s confidence.

Financial Services Agency (FSA)
Debate heats up over tax-free savings system
A controversial 2019 FSA report advised that, in anticipation of living to the age of 95, a person should have savings of at least ¥20 million in addition to other assets. This raised concerns over the sufficiency of savings in the later years of life. As a result, measures desired by the FSA to help individuals increase their savings seem more likely to be approved.
One in particular, a small-deposit untaxed savings system called the Tsumitate (accu­­mulation) Nippon Individual Savings Account (NISA), which is said to represent ground zero of the agency’s wishes. Started in 2018, the Tsumitate NISA allows savers to accumulate up to ¥400,000 per year without tax on the interest earnings, for a maximum of 20 years.
But the system is set to end in 2037, so anyone opening such an account in 2020 will only reap the tax benefits for 18 years. The FSA hopes to extend the time limit for current deposits and is seeking approval to set the stage for a semi-permanent system.
According to the FSA, the Tsumitate NISA appeals to first-time investors due to its simplicity, which fosters peace of mind. Many have voiced support for the system—particu­larly those concerned about supporting themselves in old age.
But some parliamentarians were less than sympathetic. “Depositors were informed from the start that the time frame would become shorter. This is a lapse on the part of the FSA when it designed the system,” one said. “For the revised tax scheme decided in 2017, legislators did consider combining the Tsumitate and ordinary NISAs, but no changes were made because, since certain matters were left unresolved, this would be asking too much.”
The FSA pointed out that there are nume­rous holders of ordinary NISA accounts, so it would be difficult to merge the two types. The consensus is that any future changes would necessarily be incorporated with the overall debate over tax reform.
A tax review committee under the auspices of the Liberal Democratic Party will engage in final discussion, but views among the members are believed to differ widely. Debate over major revisions to the 20-year system is expected to wrap up by the end of the year.

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