Auto industry group calls for scrapping US gas tax, adopting vehicle fee

By David Shepardson

April 1 (Reuters) – The head of a group representing nearly all major automakers on Wednesday called for scrapping the U.S. government’s 18.4-cent per gallon tax on gasoline and replacing ​it with a vehicle fee to pay for road repairs.

John ‌Bozzella, who heads the Alliance for Automotive Innovation that represents General Motors, Toyota, Volkswagen, Hyundai and other major car companies, said in a proposal first reported by Reuters the government should address the increasing financial shortfall in the highway trust fund ‌by imposing ​a single fee on every vehicle based ⁠on weight.

Congress has not raised ⁠the federal gas tax since 1993 and as more Americans drive EVs and more fuel-efficient vehicles, gas tax revenue has not kept up with highway repair needs. Because it was not indexed to inflation, ​the tax has lost more than 60% of its value in real terms.

Bozzella said the fee would be collected like a registration ⁠fee. “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.”

Since 2008, more than $275 billion – ‌including $118 billion from the 2021 infrastructure law – has been shifted from the general fund to pay for road repairs.

Many Republicans want to impose a fee on electric vehicles to help pay for road repairs.

Last year, House ⁠Republicans proposed a new $250 annual fee on EVs and $100 for hybrid EVs but it was not included in a massive tax and spending bill. The ⁠current five-year surface transportation ‌law expires on September 30.

Some states charge fees ⁠for EVs to cover road repair costs. Some Republican ​senators in ‌February 2025 proposed a $1,000 tax on EVs for ​road repair ⁠costs.

Most revenue for federally funded road repairs is collected through diesel and gasoline taxes, which EVs do not pay.

Last year, the Electrification Coalition, an EV advocacy group, argued a $250 fee for EVs was unfair since an average gas-powered vehicle pays just $88 yearly in federal gas taxes.

(Reporting by David Shepardson; Editing ​by Anna Driver)