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The leader of a trade group that represents most major automakers called on the federal government to eliminate its gasoline tax and replace it with a vehicle fee to finance road infrastructure needs.
Alliance for Automotive Innovation CEO John Bozzella, whose group represents automakers such as General Motors, Toyota, Volkswagen, Hyundai and other leading car manufacturers, put forward a proposal that urged the federal government to address the growing shortfall in the Highway Trust Fund with a vehicle fee.
The proposal would function like a vehicle registration fee that’s assessed on all vehicles based on their weight, and was first reported by Reuters. It comes as the federal government’s current surface transportation law is set to expire on September 30, which could prompt debate over policy changes.
“This policy would guarantee every vehicle on the road contributes something to maintaining America’s transportation network,” Bozzella said. “Those driving older, less fuel-efficient vehicles or who travel long distances bear the financial burden. That’s not fair.”
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An auto industry trade group is calling for a new vehicle registration tax to replace the gas tax. (Al Drago/Bloomberg via Getty Images)
The Highway Trust Fund, which finances the federal government’s surface transportation programs involving highways and mass transit, is projected to reach insolvency in 2028, at which time it would face a 46% spending cut, 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.
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The federal gas tax hasn’t been raised since 1993 and has eroded due to inflation. (M. Scott Brauer/Bloomberg via Getty Images)
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.
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The Highway Trust Fund helps finance federal spending on surface transportation programs. (Stephen Goin)
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.
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Reuters contributed to this report.
