Private-sector members of a key economic panel said Friday the government should slash taxes, primarily those affecting companies, to the tune of 1 trillion yen in fiscal 2003.

The proposal came during a meeting of the Council on Economic and Fiscal Policy as part of its overall policy recommendations for the fiscal 2003 budget.

The four private-sector members said the tax cuts should be financed by spending reductions, adding that fiscal discipline should be tightened to restore the nation's fiscal health.

They suggested that general expenditures, which cover public works spending, social welfare and other policy-related measures, should be set at around 47 trillion yen for fiscal 2003 on an initial-budget basis.

The initial-budget figure for the current fiscal year stands at 47.5 trillion yen.

The Finance Ministry believes general expenditures will increase to 49 trillion yen in fiscal 2003 if existing policy measures and social systems remain intact.

Under Friday's proposal, the government would be required to slash its spending by 2 trillion yen.

The panel members also advocated reducing the gift tax and reviewing the tax system governing land transactions.

They said the government should cut its social welfare outlays, its fund allocations to local governments and its spending on public works projects.

Heizo Takenaka, state minister in charge of economic and fiscal policy, said he will submit a revised version of the proposal at the next panel meeting, scheduled for Aug. 2.

Takenaka told reporters he hopes to hammer out a basic policy for budgetary request guidelines at that meeting.

This policy will serve as the basis for fiscal 2003 budgetary request guidelines, to be compiled by the Finance Ministry in early August.

Ministries and agencies will make budget requests in accordance with the guidelines.