Proposal to Replace Gas Tax with Vehicle Fee
The head of a major automotive industry association has urged the federal government to eliminate the gas tax in favor of a vehicle fee designed to address road infrastructure funding. This push comes from John Bozella, the CEO of the Automotive Innovation Alliance, which represents significant manufacturers like General Motors, Toyota, Volkswagen, and Hyundai.
Bozella has put forth a plan that would implement vehicle fees, functioning similarly to a registration fee that varies based on each vehicle’s weight. Reuters was the first to report this initiative, coinciding with the impending expiration of the federal government’s surface transportation law on September 30, which could ignite discussions on potential policy revisions.
“This policy ensures that all vehicles contribute to maintaining America’s transportation system,” Bozella stated. He highlighted that individuals driving older, less fuel-efficient cars and covering longer distances are shouldering an unfair financial burden.
The Highway Trust Fund, vital for federal surface transportation projects—including highways and public transit—is on track to run out of funds by 2028, leading to projected spending cuts of 46%, as noted by the bipartisan Committee for a Responsible Federal Budget.
The federal gas tax, unchanged since 1993 and not linked to inflation, has resulted in a significant revenue drop of 60% in real terms, leading to consistent deficits. Over the past 15 years, more than $275 billion has had to be transferred from the general fund to support road repairs due to spending outpacing revenue.
As the popularity of electric and hybrid vehicles rises, traditional gasoline tax revenues are diminishing. Last year, House Republicans proposed an annual fee of $250 for EVs and $100 for hybrids, but this measure didn’t make it into the broader legislative package.
In a counterpoint, the Electrification Coalition, an EV advocacy group, criticized the proposed EV fee as unfair, especially since the average gas-powered vehicle incurs only about $88 a year in federal gas tax revenue.
