A Cabinet Office panel on the promotion of devolution is pushing discussions that will lead to the preparation of a third set of recommendations for the prime minister. This set was originally supposed to be submitted in May, but its submission was postponed to September because of strong opinion within the seven-member panel that the recommendation should go to a new administration formed after the Aug. 30 Lower House election.

The main subject of the panel's discussions is how to strengthen the financial basis of local governments. The goal is to enable local governments to enjoy financial autonomy so that they can provide services needed by local residents and carry out other administrative duties without relying on money from the central government.

Local governments do more work than the central government. Yet, the latter gets 60 percent of the tax revenue against 40 percent for local governments. Subsidies from the central government and grants-in-aid from tax money make up for the local government fund shortages, but the subsidy system deprives local governments of the freedom to carry out their functions because of the strict conditions that the central government imposes on the use of the subsidies. This meddling also leads to waste of money.