Opinion: Whitmer's gas tax can't guarantee fixed roads

Charles N. Steele
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Gov. Gretchen Whitmer proposes nearly tripling Michigan’s current gasoline tax of 26 cents per gallon to 71 cents per gallon and devoting the revenues to repairing Michigan’s highway system. This proposal, to be executed in a series of 15-cent increases, would make Michigan’s tax the highest in the nation and would be a real shock at the pumps, equivalent to the price increases triggered by Hurricane Katrina in 2005.

While the governor assures us that the tax would lead to a permanent fix of our road problems, there are several reasons we should be very slow to accept this proposal.

First, a gasoline tax is quite regressive, and this is a drastic increase. For most of us, gasoline is closer to a necessity than it is a luxury. It’s the lower middle class and working poor who would be hit hardest by the tax increase since, for lower income workers, fuel expenses are a greater share of the budget.

Research by the Mackinac Center suggests that with the right tax offsets elsewhere, this harm would be minimized, and the gas tax would work as a user fee. That would make the tax increase less objectionable, but this assumes that such a package could be finessed through the Legislature, that politicians would agree on the right set of simultaneous tax cuts and increases, and that they’d stick to the program. Without these conditions, the increase is just a regressive, job-killing tax. And even with them, the tax would have serious distortionary effects -- for example, harming Michigan gas stations near the Indiana, Ohio, and Wisconsin borders. The highest gasoline taxes in the nation would hardly be a selling point in promoting commerce and encouraging business here.

Second, we should be skeptical that this would result in a permanent fix of the roads. It’s easy for politicians to raise taxes. It’s much harder for them to deliver on promises, or to avoid the temptation to divert funds to “more pressing” pet projects later, for example high speed rail projects or mass transit. 

Would advocates of the tax increase be willing to include a guarantee that the tax will never be increased again, and that, if the roads aren’t fixed in a timely fashion, the tax hikes would be suspended immediately and permanently? Would proponents of the tax even be willing to commit to these on paper? If this tax increase passes, it’s not far-fetched to think that after another couple of election cycles, we’ll be hearing about the need for yet higher gasoline taxes. 

Instead of raising the gasoline tax, we should prioritize roads in state spending. The state government ought to be reducing waste, cutting things like business subsidies, corporate welfare and funding for university “disciplines” such as gender studies, and using the savings for roads.

It’s hard to understand why taxpayers, especially poorer ones, should be paying for things that are of limited or no use to them. Before we accept the highest gasoline tax in the nation, and all the pain it will cause, let’s cut unnecessary spending from the state budget and prioritize needs.

Charles N. Steele is Associate Professor of Economics at Hillsdale College.

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