The auto industry’s main trade group is urging Washington to rethink how roads are paid for, proposing a federal vehicle fee to replace the longstanding per-gallon gasoline tax. The change would shift funding from fuel purchases to a weight-based charge applied at registration, a move proponents say would stabilise highway financing as fuel tax revenue erodes.
John Bozzella, CEO of the Alliance for Automotive Innovation — which counts major manufacturers such as General Motors, Toyota and Volkswagen among its members — outlined the proposal as a way to shore up the federal transportation account that supports highways and mass transit. With the current surface transportation law set to expire on September 30, the proposal is aimed at prompting lawmakers to confront an approaching funding gap.
Why this matters now: The federal Highway Trust Fund is projected to face insolvency by 2028, at which point analysts warn federal surface-transportation spending could be cut by nearly half. That looming shortfall and a decades-old federal gas tax that has not been raised or indexed to inflation since 1993 are driving calls for an alternative revenue model.
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Under the industry plan, the fee would be collected much like a registration charge and set according to vehicle weight — heavier vehicles would pay more. The trade group frames the shift as a way to ensure each vehicle contributes to road upkeep regardless of how often it refuels, an argument that gains force as more Americans buy electric vehicles and high-efficiency hybrids that reduce gasoline purchases.
Policy analysts point out recent trends that have eroded fuel-tax receipts: inflation-adjusted revenue from the federal levy of 18.4 cents per gallon has fallen about 60% since 1993, and Congress has transferred more than $275 billion from the general fund to supplement highway spending since 2008.
Key facts at a glance
- Highway Trust Fund: Projected insolvency in 2028, risking a near-46% reduction in federal surface-transportation spending.
- Federal gas tax: 18.4 cents per gallon; unchanged and not indexed to inflation since 1993.
- Transfers from the federal general fund to support road programs have exceeded $275 billion since 2008.
- Industry proposal: a vehicle fee assessed by weight at registration, replacing the gasoline tax as the primary revenue source.
- Recent political proposals: House Republicans last year suggested annual fees of $250 for EVs and $100 for plug-in hybrids; critics say those amounts outpace the average annual federal gas tax paid by conventional vehicles (about $88).
The recommendation echoes a broader conversation about how to adapt highway funding to changing driving habits and vehicle technology. Electrified and more efficient vehicles mean motorists buy less fuel, which reduces the traditional revenue base. Supporters of a registration-style fee say it would provide steadier, more predictable funding and distribute costs in proportion to the wear heavier vehicles impose on pavement.
Opponents — including EV advocates — warn that a flat or poorly calibrated fee could unfairly penalize drivers who have invested in cleaner technologies. Last year, an electrification advocacy group argued a proposed $250 EV fee would be inequitable given the lower average contribution from drivers of internal-combustion vehicles.
How this could affect drivers depends on political choices. If Congress pursues a weight-based fee, owners of large trucks and SUVs could see higher annual costs at registration, while owners of lightweight cars and many EVs might pay less than the cost implied by some previous fee proposals. Any shift would also change who bears the cost: rather than tying contributions to gasoline purchases, the system would collect from every vehicle on the road.
Policy alternatives discussed by transportation experts include indexing the gas tax to inflation, adopting a national per-mile charge, or combining modest registration fees with targeted fuel taxes. Each option carries trade-offs in terms of fairness, administrative complexity and privacy concerns.
The Alliance’s plan was first reported by Reuters. As Congress considers reauthorizing federal surface-transportation legislation before the fall deadline, the debate over how to fund America’s roads is likely to intensify — and any final choice will have direct effects on drivers’ annual costs and the future condition of the nation’s infrastructure.
