Prime Minister Junichiro Koizumi on Thursday called for city mayors to revise their opposition to using tax revenues specially earmarked for road construction for other purposes.
Koizumi told a Japan Association of City Mayors meeting, "Reviewing the special road revenues has drawn opposition due to misunderstandings or biased impressions." He also urged the mayors not to mistakenly believe the government plans to scale down the amount of tax revenues allocated to local governments.
Despite the prime minister's address, mayors adopted a resolution later in the meeting calling for the national government to maintain the current scheme in which designated tax revenues are exclusively allocated to road construction.
The tax revenues include those from the trade of oil and from vehicles. Local municipalities will obtain an estimated 2.3 trillion yen from the revenues for projects in the current fiscal year.
The government plans to review the practice, provoking concerns among the municipalities that possible reductions of the special revenues could adversely affect local construction businesses.
The resolution also states that cities strongly oppose a plan to slash the amount of local tax grants, which has been discussed by the Council on Economic and Fiscal Policy.
Koizumi also told the meeting, "We are working on (financial and social) structural reforms with no sacred cows considering 'What local governments can do should be in their hands'."
He asked those in attendance to devise original sources to create revenue.