The Council for Transport Policy, an advisory panel to the transport minister, wrapped up a recommendation draft Tuesday to adopt different car tax rates based on fuel-efficiency.
The proposed tax system aims to decrease Japan's carbon dioxide emissions by setting lower taxes for fuel-efficient vehicles and higher taxes for less efficient cars.
In the draft recommendation, the council suggested three types of the so-called green tax system, leaving the suggestions open for further discussion.
One idea is to levy a tax on vehicles completely based on fuel-efficiency that would require drastic changes in the existing taxation system.
Another proposal is to set fuel-efficiency standards regardless of the classification of cars and change tax rates based on the standards.
Under this type of taxation system, cars with better fuel-efficiency than the standards are eligible for a tax reduction, while vehicles below the standards are taxed more.
The council also suggested a compromise between the first two, combining the fuel-efficiency-based taxes and the classifications of automobiles under the existing tax system. The current system is based on weight and engine displacement.
The council is expected to finalize its recommendations and submit them to the transport minister on May 20. The ministry will try to reflect the final recommendations in the national tax system.