Finance Minister Sadakazu Tanigaki told a meeting of business leaders Thursday he wants to keep the issuance of fresh government bonds below the amount of tax revenues in the fiscal 2004 budget, a participant said.

"I want to avoid a situation in which the issuance of government bonds would exceed tax revenues," Tanigaki was quoted as saying by the official of the Japan Business Federation (Nippon Keidanren) in a meeting with leaders of the powerful business lobby.

For fiscal 2003, the government has estimated that tax revenues will come to 41.79 trillion yen and that the issuance of fresh bonds will total 36.45 trillion yen.

The upward pressure on spending and dwindling tax revenues have fueled speculation that next year the government will need to issue bonds in excess of the amount in fiscal 2003, possibly exceeding the 40 trillion yen mark.

During the meeting, Nippon Keidanren Chairman Hiroshi Okuda called for the extension and expansion of the tax break for mortgages, saying housing is important for a domestic demand-led recovery, according to the official.

Under the current rules, new homeowners with mortgages are given tax reductions of up to 5 million yen from their taxable income over 10 years, or 500,000 yen per year.

The tax reduction is scheduled to be scaled back to a maximum of 1.5 million yen over six years in 2004, and abolished altogether in 2005.