Under legislation dating from 1954, the government's revenues from "road-related taxes" have been exclusively earmarked for road improvement. These revenues have been a "sanctuary" of sorts for politicians representing the interests of industries engaged in road construction. Last year, then Prime Minister Junichiro Koizumi attempted to change the scheme to allow these tax revenues to be used for general purposes and to reduce government bond issuance.

Last week, a deal was reached on this change between Prime Minister Shinzo Abe's administration and the ruling Liberal Democratic Party and Komeito, and subsequently won Cabinet approval. At a first glance, it appears to be a step toward realizing the original goal. But a close look tells a different story.

Under the deal, related laws will be revised in the 2008 Diet session to change the current scheme. But not all the tax revenues in question will be lumped together with general-account revenues. Only a portion of the tax revenues that exceeds spending for road construction will be used for general purposes, and a middle-range road construction plan will be worked out within 2007 to construct or improve "truly needed roads."