OSAKA -- The Osaka prefectural government told the assembly Friday of its intention to freeze for another year the imposition of a planned local bank tax if the Tokyo metropolitan government loses an appeal over the legality of a similar levy.

On Jan. 30, the Tokyo High Court will hand down a ruling on the metropolitan government's tax levied on the gross operating profit of banks doing business in the nation's capital that have more than 5 trillion yen to lend.

The ruling will follow a decision handed down last March by the Tokyo District Court against the legitimacy of the tax.

The defeat prompted the Osaka prefectural government, which had planned to implement a similar bank tax last May, to freeze its introduction for one year to April 2003, fearing that if it loses a lawsuit it might be forced to pay huge surcharges to plaintiff banks.

Under an ordinance, adopted in 2000, the Osaka prefectural government was to levy a 3 percent tax on the gross operating profit of locally operating banks that have more than 5 trillion yen in funds available for lending.

The Osaka plan was also taken to court last April by a group of 16 banks, claiming the tax unfairly targets banks. The case is still being heard at the Osaka District Court.

Meanwhile, in fiscal 2004 the central government plans to introduce a similar size-based local tax targeting all companies.

The so-called "uniform base" tax would be imposed on the basis of size, such as number of employees and amount of capital, rather than on profits. It is controversial because it could force loss-making companies to pay tax.