A leading automotive industry organization is pushing for a major overhaul of how America funds its highway system, proposing to eliminate the federal gasoline tax in favor of vehicle-based fees.
John Bozzella, president of the Alliance for Automotive Innovation representing major manufacturers including General Motors, Toyota, Volkswagen, and Hyundai, unveiled the proposal Wednesday. The plan would replace the current 18.4-cent per gallon federal gas tax with a weight-based fee applied to all vehicles.
The federal gasoline tax hasn’t been increased since 1993, and its purchasing power has declined by more than 60% due to inflation. Meanwhile, growing numbers of electric vehicles and improved fuel efficiency have further reduced gas tax collections, creating a widening gap between highway funding needs and available revenue.
Under the proposed system, the fee would function similarly to vehicle registration costs. “This policy would guarantee every vehicle on the road contributes something to maintaining America’s transportation network,” Bozzella explained. “Those driving older, less fuel-efficient vehicles or who travel long distances bear the financial burden. That’s not fair.”
The federal government has already transferred over $275 billion from general tax revenue to cover highway funding shortfalls since 2008, including $118 billion allocated through the 2021 infrastructure legislation.
Republican lawmakers have previously attempted to address the issue by targeting electric vehicles specifically. Last year, House Republicans introduced legislation calling for a $250 annual fee on electric vehicles and $100 on hybrid models, though the measure wasn’t included in final spending legislation.
Several states have already implemented their own electric vehicle fees to compensate for lost gas tax revenue. Some Republican senators recently proposed a $1,000 annual tax on electric vehicles for highway maintenance.
The debate highlights a fundamental challenge as transportation evolves. Currently, federal highway funding relies primarily on gasoline and diesel taxes, which electric vehicle owners don’t pay despite using the same roads.
Electric vehicle advocacy groups have argued against high EV fees, noting that the Electrification Coalition calculated the average gasoline-powered vehicle contributes only $88 annually in federal gas taxes, making a $250 EV fee disproportionate.
The current federal transportation funding authorization expires on September 30, setting up a potential legislative battle over how to finance America’s highway system going forward.
