Cabinet ministers failed Tuesday to bridge their differences over the best way to revamp the allocation of funds between the central and local governments, agreeing only to discuss the issue again Wednesday.

Prime Minister Junichiro Koizumi, Finance Minister Masajuro Shiokawa, public management minister Toranosuke Katayama and economic and fiscal policy minister Heizo Takenaka were unable to reach an agreement in a meeting at the Prime Minister’s Official Residence.

“We did not reach a conclusion,” Katayama said after the meeting.

At issue is a three-part reform package that involves cuts in national subsidies to local governments, a review of tax grant allocations to those authorities and the transfer of the collection of taxes to prefectural governments and municipalities.

The reform package aims to encourage decentralization and repair the finances of the central and local governments by reducing national allocations and allowing local governments to collect more taxes for their own coffers.

The ministers have been unable to agree on the size of the cut in state subsidies to local governments and the resulting shift in tax revenues from the central government to local governments, although the plan is meant to be included in an economic blueprint to be finalized by the end of the month.

The Council on Economic and Fiscal Policy, a top government policy-setting panel headed by Koizumi, is to hold a meeting Wednesday to discuss the blueprint on economic policy and structural reforms for 2003.

At a news conference earlier in the day, Chief Cabinet Secretary Yasuo Fukuda said, “We want to present this issue to a meeting of the Council on Economic and Fiscal Policy that will be held tomorrow, so we want to do something about it by the end of the day.”

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