The government's tax panel suggested Monday transferring tobacco tax revenues from the national government to local governments as a temporary measure in fiscal 2004.
The panel also advocated de facto tax hikes for wealthy elderly people in a final report on fiscal 2004 tax reforms submitted to Prime Minister Junichiro Koizumi.
In the long term, however, the Tax Commission said the national government should hand over part of its income-tax powers to localities by fiscal 2006. This should be achieved by reducing the income tax and letting local administrations increase resident taxes, it said.