Senate leaders entered the great election-year tax debate Tuesday, blocking a House bill to eliminate the car tax and instead proposing to cut income tax rates.

The move by Lt. Gov. Casey Cagle and fellow Senate Republican leaders all but guarantees a down-to-the-wire battle to see which chamber will claim the mantle of tax-cut champion in time for the 2008 election season.

Cagle announced the Senate plan a week after the House passed legislation eliminating property taxes on cars and killing the .25-mill state property tax on homes.

Under the plan, which will be passed out of a committee Thursday, the state income tax rate would be reduced 10 percent over five years. The first step in that reduction would begin July 1, and workers could see a small cut in the amount of taxes the state takes out of their paycheck.

In the first year, the cut would amount to about $215 million. If the full 10 percent reduction is implemented, it would eventually cut state income taxes more than $1.2 billion a year.

Just how much each worker would save would depend on how much they earn. High-wage earners would save more than middle- and low-income Georgians. Many Georgians would see less than $2 more a week in their paycheck during the first year.

Cagle touted the proposal as broad, immediate and fair. "We recognize we need a stimulus plan, we need something that will put more money into the pockets of individuals," Cagle said.

But there are only eight business days left in the 2008 session. With the proposal coming so late in the session, some House members questioned whether Cagle and other Senate leaders are sincere about passing a tax cut bill this year.

"I'm not sure what their motive is here," said House Majority Leader Jerry Keen (R-St. Simons Island). "Unfortunately the net result may be that the Cagle plan is a poison pill to kill real tax reform this year."

Senate President Pro-Tem Eric Johnson (R-Savannah), disagreed.

"This isn't a House-Senate fight; this is a legitimate policy debate," he said.

Gov. Sonny Perdue was not available for comment after the Senate proposal was released. Perdue has called the House car tax proposal "irresponsible" because it cuts so much revenue at a time when the cost of providing state services is increasing.

The tax cut debate is part of a political war between three of the state's most powerful politicians: Perdue, House Speaker Glenn Richardson and Cagle.

Perdue wants lawmakers to eliminate taxes on the retirement income of upper-income retirees. The Senate has passed his bill, but House leaders have consistently said they want more broad-based tax cuts.

Richardson spent the past year pushing to eliminate property taxes. Facing stiff opposition from local governments that receive a large chunk of their revenue from property taxes, he agreed to support legislation to eliminate the car tax instead.

The House overwhelmingly passed a proposed constitutional amendment last week eliminating the car tax, limiting increases in property assessments and killing the state's .25 mill property tax on homes.

If approved by the Senate and voters in November, the state would have begun taking the property tax off cars in July 2009.

But Cagle said the tax relief wasn't fast enough, especially in a slowing economy. The Senate Finance Committee is expected to reject the car tax proposal today.

Senate Finance Chairman Chip Rogers (R-Woodstock), supports Cagle's income tax proposal instead.

"When people across Georgia are hurting, like they are now, we need to make a statement that we trust you with your money and we want you to keep more of it," he said.

But House Speaker Pro-Tem Mark Burkhalter (R-Alpharetta) argued that Georgians want tax cuts "they understand.

"They don't need to go hire H &R Block to figure out how to get a tax cut," he said. "People don't trust that a tax cut is a tax cut unless you eliminate a tax. That's what the House has done with the tag tax."

Burkhalter wondered why it took the Senate so long to propose its own tax cut. "It's a healthy debate; we're happy to begin it," he said. "We're just sorry it started so late in the session."