Motorists could face a tax on the distance they drive rather than pay excise duty on fuel.
It is just one of the options being considered by the government to maintain tax revenue, as lower-emission cars become more popular.
The Irish Times reports Department of Finance officials are warning the move to more efficient cars could 'could severely challenge the revenue' generated for the exchequer.
A similar suggestion in the past faced a backlash from TDs in rural areas and the commuter belt.
CEO of AA Ireland Brendan Nevin says there are a number of difficulties with the proposal.
"There are two problems with it. First of all, it will disadvantage drivers who have to drive further distances," he said.
"The second problem is how do you collect the money? How do you measure the mileage?"
"Currently it's easy with fuel because if you use more fuel, you'll be doing more mileage so you'll pay more tax.
"But in systems like this, how do you know how far everyone's driven?
"The danger is you end up spending more money collecting the tax than you take in from it."