The Government says GPS tracking may be used to charge drivers for using Auckland's roads - a move which experts say is the most advanced in the world but also raises concerns about "Big Brother" behaviour.
Road tolls are likely to be implemented in the next 10 years in the city and transport officials say the most effective system would cover all roads and charge motorists different rates depending on when and where they drive.
Transport Minister Simon Bridges said this could be done by GPS satellite, as opposed to toll gantries or cameras.
"You're talking about a system that crudely speaking runs from satellite and is able to, through electronic devices, tell where your car is and charge you on the time and place.
"So, for example, the most expensive time and place would be getting into the CBD at peak hour in the morning and the evening. Whereas if you are doing it at night time you may not be paying anything."
Mr Bridges said such a system could be modelled on Singapore, which plans to replace its road tolling gantries with a GPS system before 2020.
Under the Singaporean scheme, all drivers will be required to install a GPS device which can be picked up by satellite and used to bill drivers automatically.
Transport blog editor Matt Lowrie said a GPS-based system was the "Holy Grail" of road pricing. It required less physical infrastructure and could not be easily avoided by motorists, he said.
"The advantage with GPS is you can avoid issues like rat-running through sidestreets to avoid a gantry and all those types of issues that might happen with set cordons or gantries."
While motorway tolling gates or congestion charges were mostly focused on revenue-gathering, variable pricing was more effective in changing behaviour, he said.
However, a GPS system could also create new privacy concerns.
"The biggest [concern] is about 'Big Brother' - the Government knows where everyone is at all times."
GPS tracking could also raise questions about whether it could be used to enforce other laws. A recent paper by the New Zealand Transport Authority (NZTA) said proposed changes to the Singaporean system had "caused some anxiety" because transport authorities said it could catch catch speeding cars, red light-runners or illegally parked vehicles.
GPS is considered more flexible and targeted than congestion charges such as the one used in London, where drivers pay a flat rate of $24 a day if they enter a congestion zone, regardless of how long they stay in the area or what time of day.
• London: One-off congestion charge of ?11.50/day (NZ$23.70) for travel within designated zone. Cameras automatically detect number plates. Introduced in 2003, cut congestion by 20 per cent and collects more than ?150m a year
• Stockholm: Variable congestion charges which are most expensive at peak hour and free at night. Automatic toll stations pick up number plates and send a monthly bill. Introduced 2007 following public referendum, and cut congestion by 20 per cent
• Singapore: Congestion charge which changes according to traffic flows and varies depending on vehicle size. All cars must carry units which are detected by 80 gantries around the country. Introduced in the 1990s, reduced traffic by 13 per cent during charging times
(Source: New Zealand Transport Agency)