The government hopes to slash public works spending by 10 percent in fiscal 2002 and abolish the system of earmarking certain tax revenues for the construction and maintenance of the nation's road system, outlining the strategy in a basic policy plan for the fiscal 2002 budget.

The policy draft, prepared in line with Prime Minister Junichiro Koizumi's budgetary reform initiative, said the government plans to "overhaul the current arrangements for setting aside certain tax revenues exclusively for road construction."

Government sources said the proposal is expected to be adopted by the Council on Economic and Fiscal Policy on Friday. The council is chaired by Koizumi.