Finance Minister Sadakazu Tanigaki indicated Tuesday that the national government may shift some of its tobacco tax revenues to local authorities to help reform the flow of finances to local governments.
Asked which tax revenues the national government plans to transfer, Tanigaki said, "They should be those without too many disparities among regions."
In the case of the tobacco tax, the disparities are relatively small among localities.
The national and local governments currently share revenues generated by the tobacco tax.
For the current fiscal year, tobacco tax revenues for local governments are estimated at 1.1 trillion yen, while those for the national government are estimated at 900 billion yen.
Tanigaki's suggestion is expected to anger local governments, which want the national government to hand over the right to collect core national taxes, including income tax.
The government is trying to figure out which tax revenues it should shift to local authorities in compensation for a 1 trillion yen subsidy cut in fiscal 2004.
The shifting of tax revenues and the subsidy cuts form part of a plan to slash about 4 trillion yen in subsidies of this kind over three years from fiscal 2004, as well as to empower local authorities to levy taxes worth around 80 percent of the revenues they lose in compensation for the cuts.