The Cabinet approved guidelines for fiscal 2001 budget requests Tuesday that will allow policy-related spending to rise slightly above this year's 48.09 trillion yen.

In particular, the guidelines provide for 9.4 trillion yen in public works spending -- the same amount as in this year's expansionary budget.

Policy-related spending in the new budget totals about 48.4 trillion yen at the moment, the Finance Ministry said. But the figure may grow if extra expenditures, such as a special reserve fund, are added during the budget compilation process, which lasts through December.

This year's general expenditures include a 500 billion yen special reserve fund for public works projects and the transfer of 200 billion yen to a special government account.

According to the guidelines, next year's budget, which takes effect April 1, should help achieve a full-fledged economic recovery and improve the efficiency of government spending at the same time.

The government had said the current budget would put the economy on a self-sustaining recovery track and be the last expansionary budget.

The policy-related expenditures in next year's proposed budget have two special brackets. A total of 700 billion yen will be set aside for Prime Minister Yoshiro Mori to distribute to information technology and other priority projects that help with environmental protection, urban infrastructure and in coping with the aging society.

Another 300 billion yen will be reserved for various public works projects, for which government ministries and agencies will be allowed to make unlimited budgetary requests. These allocations will be examined by the ruling coalition.

All budget requests must be filed by the end of August, except for 150 billion yen set aside to adjust for the planned realignment of ministries and agencies in January.

The budget requests -- except those in the two special allocation brackets -- will be screened by the Finance Ministry, which will complete the budget in late December.

The two special allocations -- worth 1 trillion yen in total -- are intended to secure politi

cal latitude from conventional inflexible methods of budgetary distribution among ministries and agencies. The amount is 200 billion yen larger than this year's.

The guidelines urge a radical review of public works projects, which are often criticized as inefficient and a result of pork-barrel politics.

Government spending outside of public works projects should expand by 200 billion yen on this year's allocation. Natural increases of 750 billion yen for social security costs and 170 billion yen for personnel costs will be covered in the new budget.

Tax irregularities

Irregular factors contributed to a 14.1 percent rise in June national tax revenue from a year earlier to 2.1 trillion yen, the Finance Ministry said Tuesday.

Revenue from income tax grew 16.1 percent to 1.04 trillion yen because of taxed interest payments on matured high-interest time deposits in the state-run postal saving system.

Corporate tax revenue was 295.6 billion yen, roughly 57 times the figure for the same month last year. The jump is a backlash from the previous year's massive refund to the Bank of Japan.

Consumption tax revenue came to minus 141.6 billion yen, against plus 102 billion yen a year earlier. The negative figure stems from a refund in connection with the July 1999 realignment of Nippon Telegraph and Telephone Corp., the nation's biggest telecommunications operator.