Why does Michigan have crummy roads AND one of the highest gas taxes in the nation??









So Why does Michigan have crummy roads AND one of the highest gas taxes in the nation??

Here is the dirty little secret nobody else is telling you...while most states take most all the money collected from the tax on motor fuels and apply it to the roads MICHIGAN DOES NOT.  Michigan collects a lot of tax on fuels but much of it is diverted to other uses totally unrelated to the roads. 

Due to the way Michigan taxes gasoline they have one of the highest gas taxes in the nation but not much goes to the roads!  This is partially why we pay a lot AND have bad roads!

If Michigan would take all the money collected from fuel taxes and allocate it ALL to roads then road funding would not be a problem!
OK here are some more details.

Currently Michigan has a state excise tax of 26 cents per gallon of gas.  Most of this portion of the gas tax does go to the roads.

Unlike most states Michigan ALSO CHARGES SALES TAX on Gasoline.  This is 6% of the sale price!  So the amount collected depends on the price of gasoline at the time of purchase.  When gas prices are up more is collected than when prices are low.  This adds up to a huge amount of money.  This money does NOT go to the roads.  Some goes to schools and some to other uses.

OK so what should be done?

Really the best option may be to do nothing!  No new taxes.  No special interest funding.  Use the money currently collected as efficiently as possible.

However, as vehicles become more fuel efficient the total revenue (per mile traveled) from the gas excise tax will go down slowly over time.  If an increase in the excise tax is absolutely necessary to fund the roads than it could be raised an amount proportional to the lost revenue.  Maybe 4 cents per gallon.  Thats all.  No need for a HUGE tax increase.  Simple legislation to do this could be done quickly by keeping all the current language and changing 19 cents to 23 cents.  What is so hard about that?

Another more ambitious option would be to remove the sales tax from gasoline.  This would put Michigan in line with other states by only charging tax on fuel that goes to the roads.  If the sales tax revenue that was collected on gasoline needs to be replaced then that could be tied to the legislation.  But taxes should not be raised - the legislation should be revenue neutral.
Due to the way Michigan taxes gasoline they have one of the highest gas taxes in the nation.

There have been reports that Michigan does not tax gasoline as much as many other states but these are NOT telling the WHOLE truth. These reports are focusing on the excise portion of the gas tax. However, Michigan not only applies 26.3 cents per gallon excise tax but

MICHIGAN ALSO CHARGES 6% sales tax on Gasoline. The 6% is applied to the sell price of the gasoline after the federal 18.4 cent excise tax is added on.

As of June 2017, Michigan has the 5th highest overall gas tax in the nation!  So why aren't our roads better.  Because much of the tax collected on gasoline does not go to the roads but is diverted to fund other things.  So next time they say the money is all going to roads - don't believe it.  If we did put all the money collected into the roads we would have some mighty nice roads.

Here is a link to the American Petroleum Institute Summary on fuel taxes:
http://www.api.org/~/media/Files/Statistics/Gasoline-Tax-Map.pdf

Ever wonder why OHIO gas is cheaper? Lets compare.  All data as of June 2017.

Michigan

In Michigan the sales tax is applied to the actual sales cost + Federal Tax. So Michigan not only is taxing gasoline for non-road use (the sales tax revenue goes to the general fund - not roads) but also is taxing a tax.

Ohio