More than 60 percent of voters opposed the planned increase in the annual tax to 100 francs ($110) from the current 40 francs, according to referendum results announced on Sunday.
“Apparently we were not able to demonstrate the benefits of this price increase,” Transport Minister Doris Leuthard told Swiss media.
The “no” vote removes funding for nearly 400 kilometres of new roads designed to ease bottlenecks in the country’s motorway network.
Voters rejected the increase in every canton of the country, including places such as Neuchâtel and Glarus that stood to benefit from new roads.
Construction-ready plans were already in place for bypasses to relieve congestion in Morges, west of Lausanne in the canton of Vaud, at La Chaux-de-Fonds in the canton of Neuchâtel, and at Näfels in the canton of Glarus.
The cantons will now have to finance these projects independently unless a new funding formula is found.
“The federal government is sorry for the affected regions,” Leuthard said.
She warned that the federal government “does not have enough reserves in cash that can be used for road construction in accordance with the constitution”.
Last month, a poll showed a slight majority favoured an increase in the tax, which has remained unchanged since 1995, despite a doubling of traffic on Swiss roads.
The 40-franc “vignette”, fixed to the windscreen, is required for all cars travelling on Swiss motorways.
But opponents to the increase, including the Touring Club Schweiz (TCS) motorists’ group and the right-wing Swiss People’s Party, mounted a successful campaign.
These groups have argued that all money from road fuel taxes should be funneled back into road projects.
Currently, an estimated 1.5 billion francs from fuel levies flows into general revenues for the government.
However, Leuthard said this would lead to a “massive problem” for the federal budget, the Neue Zürcher Zeitung reported online.
Her transport department is working a new proposal for a road traffic fund that will be submitted for public consultation the next year, the NZZ said.