Michigan Senate plan would double diesel tax

By Keith Goble, Land Line state legislative editor | 5/27/2014

The Michigan Senate could vote as early as this week, to approve an amended plan to eventually raise up to $1.5 billion annually to fix roads and bridges in the state.

The Senate Infrastructure Modernization Committee voted this past week to send a bill to the chamber floor that seeks to increase the state’s 19-cent-per-gallon gas tax by 10 cents and double the state’s 15-cent diesel tax rate.

Each penny increase is estimated to raise $50 million in new revenue.

The rate changes would kick in Jan. 1, 2015. During the next three years the tax rates would gradually increase until reaching about 46 cents per gallon in 2018.

House lawmakers previously voted to repeal the state’s per-gallon tax rate on gas and diesel. Lawmakers haven’t increased the 19-cent-a-gallon gas tax since 1997. The 15-cent-a-gallon diesel tax has remained unchanged since 1984.

The House-approved version would replace the excise taxes with a 6 percent wholesale tax, which would allow tax collections to increase with inflation.

Initially, HB5477 would be revenue neutral for gas-buying consumers. Over time, they would pay more as fuel prices increase.

Truckers and other diesel buyers would start paying 19 cents per gallon on Oct. 1.

Other parts of the House plan under review by Senate lawmakers would increase oversize and overweight fees and fines.

Michigan law sets single-trip oversize/overweight permit fees at $50. Multiple-trip permit fees are $100.

HB5452 would double single-trip fees to $100 and increase multiple-trip fees to $500.

Oversized loads now carry a $15 fee for a single trip and $30 for multiple trips.

The bill would set fees for oversized loads at $30 for a single trip and $150 for multiple trips.

The state now raises about $4.3 million annually from permit fees. According to a fiscal note, the changes would raise an additional $11.1 million annually.

Another bill, HB5453, would double fines for overweight trucks.

Thomas Nelson, an attorney representing multiple trucking companies, cautioned lawmakers during recent discussion on the bill that increased fines would result in more litigation as businesses challenge fines.

He also pointed out that fines for overweight trucks are not routed to roads.

Another part of the House plan, HB5459, would route a portion of the existing 6-percent sales tax collected at the pump to transportation. Currently, the revenue is routed to the state’s general fund. The switch would generate $130 million a year for transportation work.

In all, the House plan would raise $450 million annually for transportation. The amount is less than half of the $1.2 billion that Gov. Rick Snyder has called on lawmakers to raise for transportation work.

House and Senate negotiators are likely to meet to try and hash out their differences before the summer break and the fall elections.

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