What Michigan gas tax hike plan could cost at pump
Lansing – — A typical Michigan driver would initially pay roughly $4.60 more per month in state gasoline taxes under a gradual tax increase proposed to boost funding for roads, bridges and public transit.
Then in 2016, that motorist could pay $8 per month more in additional tax than today and $11.40 more monthly in 2017. In 2018, a driver burning 60 gallons of fuel each month might pay $14.70 per month more than today — or an extra $177 a year, which would be more than double the $137 in per-gallon state fuel taxes he or she currently pays annually.
The numbers calculated by The Associated Press are inexact because legislation approved in mid-November by the Republican-led Senate would replace Michigan’s flat 19-cents-per-gallon gasoline tax and 15-cents-per-gallon diesel tax with a tax on the average wholesale “rack” price of gas, which fluctuates.
The tax would start at 9.5 percent in April and rise 2 percentage points each year until topping out at 15.5 percent in 2018. In today’s wholesale prices — $2.81 a gallon according the nonpartisan Senate Fiscal Agency — the per-gallon tax would come to about 27 cents next year, then 32 cents, 38 cents and finally 44 cents in 2018.
The wholesale gas price could rise or fall no more than 5 percent annually for taxation purposes under the main bill. It’s pending before the GOP-controlled House, which earlier this year approved a smaller tax hike.
The House-passed version of the bill would tax fuel at 6 percent of the wholesale price, keeping the 19-cent rate intact to start. If fuel prices rise from one year to the next, the tax could go up by whatever is less — 1 cent, 5 percent or the annual change in highway construction costs.
House Speaker Jase Bolger said the Senate plan will face an “uphill climb” during the Legislature’s lame-duck session that resumes next week.
He’s floating an alternative to gradually eliminate another tax paid at the pump — the 6 percent sales tax on fuel — and ultimately raise the wholesale fuel tax by a corresponding amount to 13 percent. His plan is opposed by schools and local governments who worry their funding from the sales tax would be put at risk despite Bolger’s contention that economic growth would bolster overall tax revenue.
American drivers on average use 60 gallons a month in gas; the average household consumes 97 gallons, said Tom Kloza, chief oil analyst at the Oil Price Information Service. He said falling gas prices could make it a “no-brainer” for states to increase taxes at the pump to fix aging infrastructure despite politicians considering gas prices to be a third rail for consumers.
As of Monday, the average price of unleaded gas in the U.S. had fallen for 60 straight days and was at its lowest point since November of 2010, according to AAA. That was also the last full year when the average came in below $3 a gallon.
The U.S. is on track for the lowest annual average since 2010 — and the 2015 average is expected to be lower even still. The drop from last year’s average of $3.51 per gallon will save the typical household about $50 a month on gas.
That household now pays about $18.40 a month in Michigan gas taxes, not including the sales tax. Under the Senate plan, it’d pay about $42.20 per month in 2018 if prices stay flat — roughly $24 more monthly, or an extra $286 a year.
Republican Gov. Rick Snyder is making a road funding deal that has eluded him for three years his top legislative priority in December.