Less than two months after the plan was first announced, the Tokyo Metropolitan Assembly voted almost unanimously Thursday to levy a controversial size-based corporate tax on major banks operating within the metropolis.

The measure calls for a five-year tax of up to 3 percent on banks with 5 trillion yen or more in net assets, meaning that about 30 banks will be affected. The levy will go into effect at the beginning of fiscal 2000, which begins Saturday, and bring approximately 110 billion yen a year to city coffers from the summer of 2001, city officials said.

The plan was put to a vote on the closing day of the assembly's regular session and approved 122 to one by the 124-seat assembly, with the speaker abstaining. The final version ended up the same as the original plan unveiled by Tokyo Gov. Shintaro Ishihara at the beginning of February.

The plan has been advocated as a means to stabilize tax revenues from banks. Such revenues have been fluctuating as a result of banks including reserves for expected future losses on bad loans in their balance sheets, which lowers their final profits.

In fiscal 1988, at the peak of Japan's asset-inflated bubble economy, the metropolitan government logged some 210 billion yen in tax receipts from 19 major commercial banks and the Bank of Japan. Tax receipts, however, dwindled to 3.4 billion yen in fiscal 1999, as many of these banks went into the red after writing off massive bad loans.

The metropolitan government plan calls for a tax based on revenues before banks subtract personnel and operational expenses, as well as costs for bad-loan disposal, which will force banks burdened with nonperforming loans to pay.

The plan has drawn wide public support within the metropolis and has renewed public criticism of the banking industry for lagging behind in restructuring efforts.

But the plan has also drawn fire from the targeted banks, the central government and other local governments. Bank officials claim the tax is a punitive measure and violates the principle of equality under tax laws. They are expected to take legal action against the metropolis as early as June.

Central government officials have voiced concern over the tax's negative impact on the economy. Others say the tax will cut into the revenues of local bodies, because banks can claim the Tokyo tax as nontaxable overhead.

Despite such criticism, debate within the assembly has been lukewarm, as the assembly's major parties had already voiced their support for the bank tax prior to the opening of the assembly session for deliberations.

"In the end, we all shared the same awareness that if we go on like this, we will go bankrupt and we can't wait for the central government," Ishihara told reporters after the assembly's vote. "The debate (at the assembly) was logical . . . It's much more interesting than what goes on in the Diet."

Ishihara also dismissed protests from the banking sector. "If you're going to raise taxes, you're going to face opposition," he said. "That's common sense."

"The people are more sensitive to world trends," Ishihara added. "They have more judgment than those guys in Kasumigaseki who are out of touch."

But he also said it is too early to say that the tax plan is home free.

"Public opinion may say (the bank tax) is safe, but the umpire has yet to speak. That's up to the courts," Ishihara said, referring to the banking industry's reported plan to file a lawsuit against the metropolis.

Vice Finance Minister Nobuaki Usui told an afternoon news conference that the central government remains opposed to Ishihara's proposed tax because it unfairly targets the banking industry.

But Usui added that the national government can do nothing to stop the metropolis from introducing it.

Usui acknowledged that despite its problems, Ishihara's proposal had the positive effect of helping stimulate discussions on a size-based local corporate tax in general.

Although discussions were reignited at the governmental Tax Commission, Usui added that a size-based tax under consideration by the tax panel covers all industries, not just major banks.