Americans already pay plenty to own a car. They pay sales taxes when they buy one. They pay gas taxes every time they fill up. They pay tolls, insurance premiums, registration fees, inspection fees, and in many states, yearly property taxes simply for the privilege of owning a vehicle.
Now Congress wants to add another bill to the pile: a new federal annual vehicle registration fee.
Some in Congress are calling it an “EV fee” aimed at electric and hybrid vehicles. Americans should not assume it will stop there.
We have seen this movie before.
In 1997, Virginians revolted against one of America’s most despised taxes: the local personal property tax on cars. Families bought a vehicle, then got taxed on it every year. The tax became a symbol of everything people disliked about government: recurring, unavoidable and disconnected from ability to pay.
One of us, Jim Gilmore, ran for governor promising to phase it out. Political experts dismissed the idea. Editorial boards mocked it. The establishment insisted repeal was impossible.
The voters disagreed.
Virginians understood something politicians often forget: a car is not a luxury for most Americans. It is how people get to work, take their children to school and manage daily life. Taxing mobility is taxing opportunity itself.
After taking office, Gov. Gilmore signed legislation beginning the phaseout of Virginia’s car tax. The effort proved enormously popular. During the 2001 economic downturn, however, the state legislature paused the phaseout and imposed a dishonest formula that permanently capped the relief in dollar terms.
With that cap in place, the car tax was gradually reimposed. When Governor Gilmore left office, 70% of the car tax had been eliminated. Today, it’s only 42%. The lesson remains clear: once government becomes dependent on recurring vehicle taxes, they are extraordinarily difficult to unwind.
Congress should take note.
The current proposal would impose a new annual federal registration fee on electric and hybrid vehicles, while effectively turning state DMVs into federal tax collection agents. Supporters argue this is about “fairness,” since EV drivers pay less in gasoline taxes.
That argument does not hold up.
Gasoline taxes are tied to usage: the more you drive, the more you pay. A flat annual EV fee breaks that link and replaces it with a tax on ownership rather than use. The proposal would begin at roughly $130 per year — well above the average $73 to $89 in federal gas taxes paid by many gasoline vehicle owners — and would rise over time.
At least 41 states already impose additional EV registration fees, some exceeding $250 annually. New Jersey, for example, currently charges $260 and plans to increase it further. A federal fee would layer another charge onto an already expanding system.
Once Washington creates a federal vehicle tax, it will almost certainly expand it. Today it applies to EVs. Tomorrow it will apply to every vehicle. And unlike gas taxes, which rise and fall with use, this fee is scheduled to grow over time.
There is also a contradiction. For years, federal and state governments subsidized electric vehicles through tax credits and incentives. Policymakers encouraged adoption and praised EVs as the future of transportation.
At the same time, they imposed fuel-efficiency standards that reduced gasoline consumption — and with it, gas-tax revenue. Now those revenue losses are cited as justification for new taxes on the very vehicles policy encouraged Americans to buy.
Americans have reason to be frustrated when government subsidizes a behavior and then turns around and taxes it again.
As governor of Virginia, Gilmore saw how deeply citizens resent policies that treat their cars as a permanent source of taxation. The backlash was a practical revolt against a system that felt disconnected from everyday life.
A vehicle tax imposed merely for ownership makes far less sense than user-based systems tied directly to actual road usage.
None of this means infrastructure funding challenges are imaginary. Roads and bridges require maintenance. But before inventing new taxes, lawmakers should first scrutinize existing revenue streams.
Congress’s real problem is not insufficient taxation, but rather chronic overspending and the inability to prioritize. A national car tax is the last thing Americans need.
What the country actually needs is a government capable of living within its own limits.
In 1997, Virginia voters sent a message heard across the country: stop treating citizens like endless sources of recurring revenue. Congress should hear that message again today.
Limited government means saying no to new taxes even when they arrive disguised as “fees.”
Especially then.
James Carter is a principal with Navigators Global and a policy advisor for America’s Economy First. Previously, he served as a deputy assistant secretary for economic policy at the U.S. Treasury. James S. Gilmore III served as the 68th Governor of Virginia and is currently the President of the Gilmore Global Group LLC.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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