The Transport Ministry, the Ministry of International Trade and Industry and the Environment Agency have drawn up the final draft of a radical plan that calls for a maximum 50 percent cut in local car tax on environmentally friendly vehicles, government sources said Saturday.

The three government agencies will try to ensure that their proposed tax incentive, which is intended to promote the proliferation of so-called eco cars, is included in the government's annual tax reform to be finalized later this month.

In a proposal put forward during the summer, the agencies had called for a cut of between 10 percent and 20 percent in local car tax for three years.

The latest proposal, however, urges the government to apply tax cuts of between 30 percent and 50 percent for new cars registered in fiscal 2001 to 2002, with the rate differing according to the extent of a vehicle's impact on the environment.

Cars running on electricity, natural gas or methanol as well as hybrid cars and those that are 75 percent or more fuel efficient than government-set standards would be eligible for the maximum 50 percent cut.

Vehicles that are 50 percent or more fuel efficient than the government's standards would be eligible for a 40 percent tax break, while those that are 25 percent or more efficient would be granted a 30 percent cut.

However, cars registered 11 years ago or earlier that are less environmentally friendly would be subject to a 10 percent increase in tax.

Explaining the reasons behind the tax cuts, which are more comprehensive than those proposed previously, an Environment Agency official said, "We try to match the total amount of tax cuts with the amount of tax increases based on our estimated number of cars subjected to tax incentives and disincentives."

A total of 1.967 million cars would be entitled to tax cuts, reducing tax revenues by 48.05 billion yen in two years. Some 13.56 million cars would, however, be subjected to higher taxes, thus bringing in 46.91 billion yen in tax revenues.

The introduction of the planned tax scheme is still uncertain as opposition is being formulated from within the government and some Diet members.

"We've got to be more considerate of individual car owners who would be subjected to a heavier tax burden," one Diet member said.