Tokyo Advice to U.S.: Save, Pay More Tax : Trade talks: Americans should cut back on credit cards, raise gasoline tax, scrap home mortgage deductions, Japanese say.

Japan, in a letter to U.S. trade negotiators, said the United States should limit credit card ownership, raise the gasoline tax, impose a federal sales tax and scrap the income tax deduction on home mortgages, Yomiuri Shimbun, Japan’s largest daily newspaper, reported today.

The letter, written by the Japanese government, listed 80 steps the United States could take to improve its economy, cut spending, increase savings and help reduce the trade deficit, according to the newspaper, which obtained a copy of the letter.

Japanese officials refused to confirm details of the letter but said it is part of the ongoing U.S.-Japanese trade talks aimed at identifying the causes of the U.S. trade deficit with Japan, which has been hovering around $50 billion a year for several years.

“In the process of negotiation, both parties have proposed various ideas for structural improvements, but in concrete terms, we are not going to make any comment,” said a Foreign Ministry official.

The United States has drawn up its own list of more than 200 proposals on how Japan can reform its economy to make it more open to U.S. imports, according to a report last week in another newspaper, Asahi Shimbun.

The Americans suggested that Japan take steps to increase public works spending, break up business monopolies, bring down land prices and streamline the process for opening retail stores.

Japan’s suggestions to the United States, according to the newspaper, included:

* Limit the number of credit cards one person can own to reduce consumer spending.

* Abolish the income tax deduction on home mortgages, which the Japanese say encourages spending not saving.

* Construct a network of high-speed public railways to reduce energy consumption.

* Enact a federal value-added tax, a sales tax paid by manufacturers and merchants, to help reduce the budget deficit.

* Increase the federal gasoline tax.

* Amend the Gramm-Rudman deficit reduction act so that any year the budget reduction target is not met, 120% of the portion not met must be trimmed from the next year’s budget.

* Introduce a system of tax-free employee savings.

President Bush and Prime Minister Toshiki Kaifu have said the far-reaching trade negotiations are a two-way street and an opportunity for both sides to improve their economic systems.