Finance Minister Sadakazu Tanigaki and Internal Affairs and Communications Minister Taro Aso agreed Saturday to earmark 16.9 trillion yen in tax grants for local governments next fiscal year, unchanged from this year, according to Finance Ministry officials.
The move paves the way for the Finance Ministry to set its draft fiscal 2005 national budget at about 82.2 trillion yen, up from the initial budget of 82.11 trillion yen for fiscal 2004.
It will be the third straight year of increase.
The amount of local tax allocations was a major focus in formulating next year's budget. The Finance Ministry wanted sharp cuts. But the Internal Affairs and Communications Ministry -- and ruling party lawmakers with vested interests in local government affairs -- opposed such a move.
The Finance Ministry has slashed local tax grants for four straight years through fiscal 2004 in a bid to rein in local administrative costs and public works spending, some of which has been considered wasteful.