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Economy & competitive position/Public sector

Michigan’s current fuel taxes place it in the national top 10

Michigan last raised its fuel taxes in 1997, moving it from 15 cents to 19 cents (technically 18.715) for gasoline. In the interim, the buying power of those 19 cents — for asphalt, steel and the other elements of road construction and repair — has eroded. The nonpartisan Citizens Research Council noted in a 2011 report that had the 19-cent levy kept pace with inflation, it would now be 27 cents.

In addition to this direct fuel levy on a gallon of gas, Michigan also imposes a 6 percent sales tax on the fuel (and on the federal 18.4 percent fuel tax). The figure in the ranking below reflects total state taxation on fuel, not just the direct per-gallon levy.

Proposals under consideration at the State Capitol center on shifting from a retail fuel tax to a wholesale one, raising registration fees or adding 2 cents to the sales tax to allow for elimination of the fuel tax.

Derek Melot is a former assistant editorial page editor, columnist and reporter at the Lansing State Journal, where he covered state and local issues extensively, earning awards from the Associated Press and Michigan Press Association. The Oklahoma native moved to Michigan in 1999, and served as Bridge editor through mid-2013.

4 comments from Bridge readers.Add mine!

  1. Morris Taber

    You include the sales tax in your calculations. However, all sales taxes go to other support of government functions. A proper analysis of state support of our roads would be comparing funds available for such use.
    Moreover, Michigan, by virtue of its unique geographic configuration is more dependent on its highways than any other state. The combination of winter weather and extremely heavy truck usage tears up our roads.

  2. jim

    The amount spent elsewhere from the sales tax doesn’t matter. What this shows is the actual amount changed per gallon of fuel in Michigan- and yes, it’s up there pretty high.

    Personally I think it needs to be higher for gasoline, and lower for alternative fuels, in order to promote use of fuels made here in Michigan. Ethanol and biodiesel are both made in Michigan and return money to local Michigan producers.

  3. Robert Gorsline

    There are alot of other northern states that rank much lower in taxes than Michigan, and we should learn from them how they fund their road expenses without raising taxes. Or haven’t Michigan lawmakers considered such investigations first before they propose new ones? Also, many of the sources of revenue are put into the General Fund to help fund other projects than what they were first intended. For example, the Michigan Lottery was intended to fund Michigan schools and yet the funds went into the General Fund. Also, the Michigan Banks pay a fund into the Michigan Bank Examiners’ fund, but it was removed and put into the General Fund by Governor Granholm. Thus this remanipulation of dollars creates shortages in the areas that really need the dollars rather than put them into the pet projects that lawmakers like to do. Good luck in changing the system.

  4. Scott Hagerstrom

    This is a proper analysis. Michigan taxes gasoline at a greater rate than 44 other states. Under Gov. Snyder’s proposal Michigan would have the highest tax on gasoline in the country. I am disappointed that Gov. Snyder is not looking into more efficient means to run state government to extract cost savings that would enable more of current dollars being collected to be put into roads.

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