The Finance Ministry plans to cut subsidies to local governments by 1 trillion yen in the budget for fiscal 2004, ministry officials said Monday.

Tax allocation grants from the national government to local governments account for 20 percent of Japan's annual general-account budget. These subsidies stood at 17.4 trillion yen in the fiscal 2003 budget, which totaled 81.79 trillion yen.

In their fiscal 2004 budget requests, the local governments have asked for a combined allocation of 19.49 trillion yen.