For the sake of 7.5p extra per litre of fuel they could do away with tax disks, the overheads in the postoffice, the overheads in the DVLA etc etc and still get £150 per year from someone doing 20,000 in a 50mpg diesel.
Sounds a good idea - but I still think they should still offer high prestige "I'm a fuel guzzler" discs to all 4x4 owners at say £1000 each (with exemptions for farmers etc)