The Cabinet approved a bill Friday calling for drivers of an average passenger car to pay a base rate of euro0.03 per 1 kilometer (7 US cents per mile), beginning in 2012. Drivers of heavier, more polluting vehicles will pay more, and the cost will go up for driving in peak hours.
GPS will track the time, hour and place each car moves and send the data to a billing agency.
But the annual road tax and purchase tax for new cars will be abolished, reducing the price of a new car 25 percent, the Transport Ministry said.
Nearly 6 out of 10 drivers will benefit under the system, the ministry said, but government revenue would remain the same. Public transportation, including taxis, will be exempt.
The kilometer tax has been debated for several years, amid concerns that it would unjustly raise the cost of car travel and intrude on privacy.
The ministry said, however, the travel information would be protected, and the data would not be accessible to the government for other purposes.
The ministry calculated that overall traffic will drop about 15 percent, peak-hour congestion will be halved, traffic deaths will fall 7 percent and carbon emissions from road travel will be cut by 10 percent.
The tax will increase every year until 2018 and could be adjusted if it fails to change traffic patterns.
