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A government advisory panel approved a plan Monday to introduce a prepaid system for car recycling fees, a move intended to reduce the illegal dumping of used cars.

The plan, presented by the Ministry of Economy, Trade and Industry, was approved by the Industrial Structure Council, an advisory panel that is studying the car recycling system.

The system would be the nation’s first prepaid recycling system.

The panel will incorporate the proposal in a package of recommendations on automobile recycling, an interim version of which will be released next month.

The ministry plans to draft the necessary legislation and send the bill to the regular Diet session next year, ministry officials said.

The proposal calls for establishing a public agency to collect and manage recycling fees to be paid by car buyers.

When cars are disposed of, the agency would use the funds to pay recycling operators.

The public entity will hold recycling fees for an average of about 10 years, which is estimated to be the useful life span of a car.

The recycling fees would be determined by automakers, which would cover the gap between the fees and actual costs of recycling, according to the plan.

The plan also calls for issuing recycling tickets to collect fees for the 70 million automobiles that are already on the road or will be sold before the recycling system goes into effect.

The proposed recycling law is the government’s latest effort to eliminate the illegal dumping of large consumer goods.

In April, an electric appliances recycling law took effect requiring owners to pay for the disposal of used televisions, air conditioners, washing machines and refrigerators.

Unlike the proposed auto recycling system, the disposal fee for electric appliances is collected at the time of disposal.

The ministry believes levying the disposal fee at the time of purchase would be more effective in preventing illegal dumping.

The envisioned system of advance collection had previously been stymied by the issue of automakers having to pay corporate tax on recycling fees if they collected the vehicles.

Ministry officials said, however, that this tax problem will be eliminated if a public entity handles recycling charges as a nonprofit organization.

With this scenario in mind, they said, the prepaid system has become an attractive option.

The ministry is now negotiating with the Finance Ministry and the National Tax Administration to reach agreement with them on the issue, the officials said.

Meanwhile, the ministry has yet to sort out what to do with the disposal deposits for cars that might be exported in the future as used cars.

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