Michigan governor pushes nearly doubling fuel tax rates

By Keith Goble, Land Line state legislative editor | 2/8/2013

Gov. Rick Snyder on Wednesday, Feb. 6, unveiled his proposed $50.9 billion budget to Michigan lawmakers. One component of the plan is nearly doubling the state’s fuel tax rates.

This week’s announcement follows last month’s release of his $1.2 billion a year plan to raise new revenue for transportation. The plan relies on taxes and fee increases.

The governor says something needs to be done to fix roads.

“Let’s get the dollars, let’s get the resources, and let’s get better roads,” Snyder said Friday via Twitter.

He called on lawmakers to approve a plan to change how the state collects fuel taxes.

Currently, the state’s per-gallon tax rate on fuels does not change. Lawmakers haven’t increased the 19-cent-a-gallon gas tax and 15-cent-a-gallon diesel tax since 1998.

Snyder wants to get rid of the current system and start taxing gas and diesel at the wholesale level. The change would allow tax collections to increase with inflation.

A Senate package of bills covers the tax and fee increases sought by the governor to raise more than $1 billion annually.

One measure would give Michigan voters the final say on higher fuel pump prices.

Senate Joint Resolution J would amend the state’s constitution to raise the 6 percent sales tax to 8 percent and dedicate all new revenue solely to transportation. In exchange, the state’s fuel excise tax would no longer be collected.

More than 90 percent of the new revenue would be routed to roads. Transit would claim nearly 10 percent.

If the first option falls through, higher fuel taxes and vehicle fees would be imposed.

SB87 calls for replacing the state’s excise tax with a wholesale tax. The equivalent tax for gas and diesel would be 37 cents per gallon. Annual adjustments of as much as a penny could also result.

SB88 would increase vehicle registration fees. Fees for smaller vehicles would rise 80 percent. Large trucks and trailers would increase 45 percent.

To view other legislative activities of interest for Michigan, click here.

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