Share and Follow
The head of a prominent automotive trade association has urged the federal authorities to reconsider the gasoline tax, advocating instead for a vehicle fee to support road infrastructure funding.
John Bozzella, CEO of the Alliance for Automotive Innovation, which includes major automakers such as General Motors, Toyota, Volkswagen, and Hyundai, proposed a new strategy to tackle the looming deficit in the Highway Trust Fund. His suggestion involves replacing the current tax with a fee based on vehicle weight, aiming to secure a more stable funding source for road maintenance.
This proposal resembles a vehicle registration fee and was initially highlighted by Reuters. It emerges at a critical time as the existing federal transportation legislation is due to expire on September 30, potentially opening up discussions for significant policy revisions.
Bozzella emphasized, “This approach ensures every vehicle contributes to the upkeep of America’s transportation infrastructure. Presently, owners of older, less efficient vehicles or those who travel extensively shoulder most of the cost. That’s inequitable.”
The Highway Trust Fund, essential for financing national highway and transit projects, is on a path to insolvency by 2028, which could result in a 46% reduction in spending, according to the nonpartisan Committee for a Responsible Federal Budget.
Revenue from the 18.4-cents per gallon gasoline tax has declined 60% in real terms, as the federal gas tax hasn’t been increased since 1993 and wasn’t indexed to inflation.
The shortfall has caused Congress and successive administrations to shift more than $275 billion from the federal government’s general fund to help pay for road repairs since 2008, as spending has consistently outstripped revenue.
Gas tax revenue has also declined amid the emergence of electric vehicles (EVs) and more fuel-efficient hybrids that reduce the frequency of fill-ups by drivers.
A proposal by House Republicans last year would have imposed a new $250 annual fee on EVs and $100 for hybrid EVs, though it wasn’t included in the One Big Beautiful Bill Act.
Last year, an EV advocacy group known as the Electrification Coalition argued that the proposed $250 fee on EVs was unfair because an average gas-powered vehicle pays just $88 a year in federal gas taxes.
Reuters contributed to this report.