Ending the need for motorists to fix the paper disc to their windscreens is being looked at in the light of the growth of computer records on motoring.
The end of the road for the tax disc is one of the options being considered as part of proposed reforms to motor service agency operations put forward by Roads Minister Stephen Hammond.
In a consultation document, the Government talked of removing "the need for unnecessary paper including abolishing the driving licence paper counterpart and considering the continuing need for the tax disc".
Mr Hammond said: "If you drive, run a business or pay taxes you will be a customer of ours and I hope you will have your say about how we can improve the services we offer you.
"Much progress has already been achieved and it is now much easier to use digital services to get driving licences and sort out vehicle tax. We have also already announced that we are bringing the driving test closer to customers by exploring a range of different locations, such as colleges and retail premises.
"But there is more that can be done and this consultation is about the Government listening to its customers before agreeing the way forward."
Tax discs were introduced in the UK in 1921 following the implementation of the Road and Finance Act 1920. Most cars that use public roads in the UK must display at tax disc.
The cost for vehicle excise duty is based on carbon emissions, with Band A cars, which produce up to 100g of carbon dioxide per kilometre, paying nothing annually and Band M vehicles, which create over 256g of CO2 per km, facing a £460 charge.