Four ministers decided Tuesday to set numerical targets as part of efforts to improve the flow of funds between the central government and local governments, with Finance Minister Masajuro Shiokawa proposing a 4 trillion yen cut in subsidies as part of the plan.
The agreement on the targets was reached in a meeting attended by Shiokawa, public management minister Toranosuke Katayama, Chief Cabinet Secretary Yasuo Fukuda and economic and fiscal policy minister Heizo Takenaka.
The ministers agreed to include the goals in a report to be compiled later this month by the Council on Economic and Fiscal Policy, a key economic policy-setting panel.
Shiokawa told a news conference he proposed that national subsidies to local governments, excluding those for public works, be cut by 4 trillion yen.
The minister said that under his plan, the central government would cede to the local governments the power to collect taxes equivalent to 70 percent of the 4 trillion yen cut, or 2.8 trillion yen.
If these local authorities hope to continue with the same number of projects, they would need to generate the remainder of the funds themselves or reduce project costs.
Katayama criticized Shiokawa’s plan during a separate news conference.
“The figures, such as 70 percent or 80 percent, are mentioned on a whim, and it is unconvincing,” said Katayama, who wants to secure 100 percent of these funds for local governments.
Bickering among government ministries continues over the so-called Trinity Reforms package, which involves subsidy cuts, a review of tax grant allocations to local governments and the transfer of tax-collecting powers to local governments.
There is agreement that all three policy items should be promoted as a single package, but the ministries are at odds over where to begin.
The public management ministry wants the central government to transfer its tax collection role to local governments first.
But the Finance Ministry, which wants to fix the central government’s debt-ridden finances, is emphasizing cuts in tax grants and subsidies.
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