UPDATE 1-US panel: hike gas tax for roads, curb privatizing

(Adds privatization proposals, paragraphs 9-12)

WASHINGTON, Jan 15 (Reuters) - U.S. gasoline taxes should be raised at least 25 cents over five years to pay for upgrades to highways, bridges and other transportation networks, a congressionally appointed panel recommended on Tuesday.

The National Surface Transportation Policy and Revenue Study Commission, which was created in 2005 to assess transportation systems and find ways to finance improvements, said policy changes alone will not get the job done.

"Significant new funding also will be needed," the panel said in its report, which recommended $225 billion in annual spending per year from all federal, state, and private sources.

Transportation Secretary Mary Peters, who chaired the panel, refused to sign the final report because of the gas tax recommendation.

The commission called for raising the federal gasoline tax between 25 and 40 cents per year over five years.

Gas tax revenues are collected by states and used for construction and transit projects.

The panel also endorsed as promising new tolling strategies, including one to charge motorists in major metropolitan areas more to use highways at busier times.

"Governments on all levels should encourage public-private partnerships as a means of attracting additional private investment to the surface transportation system," the group said.