That, and this proposal is even more insidious -- the system does not rely on odometers (partly for the reason that fritzz identifies), but on a GPS device in the car. The tax authority can track WHERE and WHEN you are driving. Of course, this information wouldn't be kept on file, and would only be aggregated for tax purposes blah blah blah.
There is an upside -- you wouldn't have to buy a Lojack -- the cops could just use the gps on board you car. If your teenage kid is missing at 4:00 AM, maybe you could track the car and make sure she's safe (before you ground her for life).
Of course, there's the potential for abuse.
So Now I'll sell repair kits to help put GPS systems on the right track. And, we might need a mini-jammer while we are repairing our system.
Put a wet sock over the GPS antenna. No signal, no tracking. There are many places where GPS signals can not be picked up (urban canyons, natural canyons, tree cover, parking garages). Since loss of coverage is normal, you can force a prolonged one. The only way to detect this attempt to cover the GPS tracking would be to also electronically track a mechanical (wheel rotation) odometer in parallel with the GPS.