The tax debate sparked by Tokyo Gov. Shintaro Ishihara has reached a milestone now that the metropolitan assembly has almost unanimously approved his plan to impose a new asset-based tax on large banks operating in the capital. The bank tax, which is good for five years and replaces the current business tax levied on income, goes into effect today, the first day of fiscal 2000.

The controversy has left the key issue of "fairness in taxation" unresolved, however. The assembly made it clear that the new tax will cover only banks and that other corporations will continue to enjoy the privilege of tax exemption if they are in the red. Major banks are bracing for a court battle, on the grounds that the new levy violates the Local Tax Law as well as the constitutional principle of equality under the law.

The issue needs to be discussed further, not only by the central government and political parties, but by local governments that face the same question as Tokyo: how to raise their own tax revenues. Of course, it must be considered in the broader context of the tax system and devolution of power. Taxpayers' participation in the debate is particularly important.