The Transport Ministry said the change is expected to slash congestion by half and reduce carbon dioxide emissions by 10 percent, according to an AFP report.
Under the new law, motorists driving a mid-size sedan would pay €0.03 per kilometer, or about $0.07 per mile. The tax would climb to €0.067, or about $0.16, per km in 2018.
The law will take effect in 2012 if passed.
"Each vehicle will be equipped with a GPS device that tracks how many kilometers are driven and when and where. This data will be then be sent to a collection agency that will send out the bill," the ministry said in a statement.
The exact tax would be based on the type and weight of automobile used. Buses, taxis, vehicles owned by the disabled and motorcycles would be exempted.
The Dutch cabinet approved the legislation Friday, but it must be passed by Parliament before becoming law.
Advocates of the tax say the majority of drivers would actually benefit because the brunt of the tax would be held by those who drive the most and farthest.
In addition, the price of a new car would significantly decrease, because taxes consist of about 25 percent of a car's sticker price.
Detractors of the tax say the proposal isn't fiscally sound and could hurt the nation's overall budget by discouraging citizens to drive.
This post was originally published on Smartplanet.com