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The Construction Ministry plans to overhaul the way road construction is funded to reduce the taxation disparities brought about by the rise of alternate-fuel and energy-efficient cars, it was learned Monday. Reforms under consideration include a tax on fuel efficiency, which would affect all vehicles, and altering the current taxation system to reflect reductions in carbon dioxide emissions, ministry sources said. The current framework for road construction costs is based on the idea that those who use the roads should shoulder the financial burden of their construction and repair. At present, motorists pay taxes on gas and vehicle weight. The government estimates that revenue from such levies will amount to roughly 5.88 trillion yen in fiscal 2000, which begins in April. However, owners of vehicles that run on other means of energy, such as electricity, natural gas or methanol, do not pay any tax similar to the gasoline tax. The ministry hopes the new road construction spending system will be reflected in the government’s next five-year road maintenance plan that begins in fiscal 2003. It plans to set up a study panel on the issue by the end of the month whose deliberations would be reported to such bodies as the ministry’s Road Council, the sources said. The soon-to-be-formed study group will look into the way such cars are taxed in other countries and review the gasoline tax, according to the sources. Panel members will debate such issues as whether it is better for all vehicles to be taxed according to fuel efficiency or introduce a new tax that will include the energy sources of environmentally friendly vehicles, they said. The government’s Tax Commission is widely expected to urge the government to consider the introduction of some form of “green tax” in its report on taxation measures for the medium term due out this spring. Industry figures show that there were 29,000 environmentally friendly cars, including those with hybrid engines, as of March 1999, but experts say the figure could top 3.4 million by 2010, boosted by the introduction of vehicles using fuel cells.

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