Japan seeks to boost stock buying

Takenaka (right) says Japan will encourage citizens to put more of their $11.2 trillion in assets into stocks

By staff and wire reports

TOKYO, Japan -- Japan is seeking to boost its stock market by encouraging Japanese people to invest.

The government is considering a range of measures to get citizens to put more of their money in the market, Economics Minister Heizo Takenaka said in an interview televised on Monday.

Takenaka said those measures, including tax-system revisions, will be given top priority in the government's structural-reform plans.

"Securities-market measures, including the taxation system, would be included as one of the top-priority short-term policy steps," Takenaka said.

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The aim is to encourage citizens to put more of their $11.2 trillion (1,400 trillion yen) in assets into stocks.

Japan has long been characterized as a nation of savers rather than investors. They're much more likely to leave their money in the bank than invest in stocks.

"The 1,400 trillion yen pool is so big that even a small portion of it flowing in would make a change for the market," he added.

Tax break possible

The government has been studying tax incentives for stock-market investors since early this year. Parliament approved a tax break on capital gains below 1 million yen a year in its last session, which ended last month.

The idea of letting people write off stock losses against their income has also been floated, as well as dropping the capital gains tax as low as 10 percent. It now stands at 26 percent.

Japan's stocks were having a bumpy ride Monday. After closing up for the morning, the benchmark Nikkei 225 index was back in the red Monday afternoon, trading down 0.6 percent at 12,287.

Japanese Prime Minister Junichiro Koizumi said on Sunday he was not ruling out the possibility of a supplementary budget this year.

Koizumi has made curbing public spending a cornerstone of his reforms. But many experts say a supplementary budget is likely necessary this year, to combat an economy officials admit is likely in recession.

"There will likely be talk of fiscal spending, but we don't need to heed such calls," Koizumi said. "We will take a bold and flexible approach."

The prospect of more government spending was pushing down the price of Japanese government bonds on Monday.

But Koizumi said any steps need to fit with his reform plans. Koizumi said one possible plan of attack was to change the way the fiscal 2002 budget was allocated, though he didn't elaborate.

Reuters contributed to this report.