Just ahead of the release of the much anticipated Henry tax review, a key infrastructure lobby group has demanded that road taxes should be scrapped in favor of charging motorists for each kilometer they drive.

It was already hinted by Treasury secretary Ken Henry in last October that his tax review would advocate a revamp of Australia's road charges. According to Dr. Henry, road congestion costs about $9 billion a year and will rise to $20 billion in another ten years.

The prospect of a congestion tax was raised by him in order to discourage people from driving during peak times. The Executive Director of Infrastructure Partnerships Australia revealed that the existing road taxes including registration, licensing fees and the fuel excise can be eradicated. Instead the motorists should be charged a per-kilometer.

He said, “"[That would mean] moving to a three-tier pricing system, moving to a more efficient way of collecting tax charges across our transport network, bringing a fairer, more equitable system”.

The average motorist would pay about 8 cents for every kilometer they drove, according to what IPA has calculated. This way, driving during peak times in a metropolitan centre would cost more. But, if the motorists ventured out at off-peak times, the charge would be less.