While the HTF's solvency problems are very real, and we need to address the increased gap that EV and other alternative fuel vehicles have created, this legislation has just one problem: It won't work.
Discussions about the insolvency of the Highway Trust Fund (HTF) have been happening since the early 2000s, and I wrote in 2023 how the booming EV market was going to make matters worse. While several committee hearings were held during the Biden administration, neither the Infrastructure Investment and Jobs Act (IIJA) nor the Inflation Reduction Act (IRA) addressed the problem.
In short, the HTF was funded for nearly seven decades through the federal gas taxes that are collected when you refuel an internal combustion engine (ICE). It is a consumption-based tax that was originally designed to link the use of petroleum based, fossil fuels, to the maintenance and condition of our roadways. The problem with a consumption-based tax on fuel is that as new technologies, innovative designs, and battery breakthroughs happen, the consumption of fuel has greatly diminished and continues to decline.
Instead of this being received as a good thing, due to lower pollution, cleaner air, and cheaper transportation, its has caused considerable handwringing going back before the early 2000s. The HTF has been running out of money, and it's been running out of money for a long time.
On Feb. 12, 2025, Sen. Deb Fischer (R-Neb.) reintroduced a bill that she says is meant to rebalance the scales, and ensure that EV owners are paying their fair share of the costs to maintain the roads they use. In addition to Fischer, the legislation is co-sponsored by Sens. Cynthia Lummis (R-Wyo.) and Pete Ricketts (R-Neb.). Rep. Dusty Johnson (R-S.D.) introduced identical companion legislation in the House.
Named the "Fair Sharing of Highways and Roads for Electric Vehicles Act," or the "Fair SHARE," act, it proposes a one-time fee on the battery at the point-of-sale to manufacturers totaling $550, "on each battery module with a weight of greater than 1,000 pounds....intended for use in an electric vehicle."
Secondly, there is a $1,000 tax placed on the sale of each EV when bought by the customer. This would, assumedly be used in tandem with other recent policy measures to remove previous EV tax breaks and incentives. The legislation excludes hybrid vehicles which still contain an ICE as its means of propulsion and/or charging.
In a press release from Fischer's office, she correctly states that, "EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges. It’s only fair that they pay into the Highway Trust Fund just like other cars do. The Fair SHARE Act will require EVs to pay their fair share for the upkeep of America’s infrastructure."
While the problem of solvency for the HTF is very real, as is the need to address the gap that EV and other alternative fuel vehicles create, this legislation has just one problem: It won't work.
Not only will it not work, it's of such a small financial import that it almost makes you have to ask whether or not it was actually written with the intent to address the problem at all.
Why It Won't Work....And Maybe Wasn't Meant To
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Yes, EVs are exacerbating the HTF's problems, but it isn't the root-cause, and the revenue that the Fair SHARE Act would generate for the HTF is a drop in the bucket compared to its real-world shortfall. How far short?
According to the Eno Center for Transportation, the HTF ran a structural deficit of $17.8 billion in 2023 (most recent data), and in that same year the Congressional Budget Office (CBO) estimated that by 2028 that figure would be closer to a $24 billion deficit.
In 2023, 1.18 million EVs were sold in the United States, which was a massive 49% increase from 2022. If we apply Fischer's new bill to these sales, at $1550 per vehicle, it would roughly generate $1.83 billion.
This would account for approximately 9.15% of the still growing deficit. Targeting the increasingly popular EV market, in this way, obviously, cannot solve the real problems with the HTF. That doesn't mean it's impossible.
Other Ways That EVs Can Pay Their Share
The Republican senator's bill doesn't address the core problems of the past, despite the problems being well known and studied. The legislation only targets the symptoms of the HTF's malady. If any member of Congress in Washington were truly interested in solving this problem they would, at the very least, have to take into account that the federal fuel tax hasn't been adjusted since 1993.
Why? Because it's a lot less popular to sponsor a bill which will directly raise the price at the pump for everyone, even if would completely solve the HTF shortfall, than to announce your going to tax EVs, and act like that will solve the problem.
However, even raising the federal fuel tax and slapping a fee on EV sales wont make up the economic distance needed. Figuring this out is essential for maintaining our roadway infrastructure, and, subsequently, keeping the asphalt industry alive and well.
Usage Vs. Consumption
What's the difference between taxing usage versus taxing consumption? Consumption taxes are everywhere, and we understand them implicitly. It's how the fuel tax works already. You buy a certain amount and pay a tax on the quantity.
The future success of the HTF and our infrastructure funding depends on severing the ties to this consumption based model, and moving to a usage based one. Like Fischer pointed out in her statement, the EVs actually use more of the road than their ICE counterparts. Per mile driven, they are putting more strain on our streets.
The executive director for the Washington State Transportation Commission (WSTC), Reema Griffith, spoke during the U.S. House of Representatives Committee on Transportation and Infrastructure Subcommittee on Highways and Transit hearing titled, "Running on Empty: The Highway Trust Fund," which took place on Oct. 18, 2023, and hosted by congressional Republicans.
"The WSTC has been conducting a legislatively directed assessment of Road Usage Charging since 2012, carrying out extensive research and testing on the topic. A Road Usage Charge (RUC), also referred to as a Mileage Based User Fee (MBUF), or a Vehicle Mileage Tax (VMT), is a per-mile charge drivers pay for the use of public roadways, embodying the “user pay, user benefits” concept. In Washington State, RUC is being assessed as a replacement to the 49.4 cent-per-gallon state gas tax, and as such, during a transitional time where RUC and gas tax would both be collected, drivers would receive gas tax credits for taxes paid, and those credits would be applied towards their RUC. This approach was successfully demonstrated in Washington State’s year-long, 2000-driver statewide pilot test of RUC in 2018 and 2019."
Any real conversation about fixing the HTF must include an approach along these lines if it has any hope of making a difference. In truth, it will likely take a usage based tax, along with a fuel tax increase on a sliding schedule to increase over time (perhaps tied to inflation), and, perhaps, point-of-sale fees, too.
For now, however, this piece of legislation, as it currently stands, is not a useful solution.
anuchit2012
anuchit2012
