Republican Gov. Rick Snyder presented a report in late October from the state House of Representatives Transportation Committee that found the costs to meet Michigan’s infrastructure needs would exceed the current budget allotment by $1.4 billion. In an attempt to account for this discrepancy, the state Senate is considering a proposal to increase infrastructure funding by replacing the current gas tax with an increased sales tax. The proposal would unfairly tax residents and should not replace the current gas tax.
In Michigan, infrastructure funding comes from a 19 cent per gallon state tax on gas. The proposal put forward by state Sen. Howard Walker (R–Traverse City) last week would replace the revenue lost from cutting the gas tax by increasing the state sales tax from 6 percent to 7 percent. The extra revenue — estimated at $830 million in 2012 by the Senate Fiscal Agency — would go to the Michigan Transportation Fund.
According to the Michigan Department of Transportation, the state would lose $962 million if the gas tax were repealed. The revenue from Walker’s proposal would increase to an estimated $1.14 billion in 2013, but costs associated with implementing the measure could lower the potential revenues, according to the Michigan Infrastructure and Transportation Association.
A gas tax is a logical way to raise revenue for state road repairs. Under the current system, when drivers buy gas, they pay for their vehicle’s fuel and use of the road. This system makes sense because drivers who use the roads are the people paying to upkeep them. By increasing in the sales tax, the Legislature would be putting the burden on all Michigan residents instead of those who use roads the most.
In order to raise the sales tax, voters would have to amend the state constitution. As the recession has been particularly harsh in Michigan, it will be difficult to convince residents to voluntarily raise taxes. The campaign for the proposal would be costly and time consuming, and no back-up plan to generate the funds lost by repealing the gas tax currently exists. Michigan’s already deteriorating infrastructure would be set back even further if voters rejected the measure.
Proponents of repealing the gas tax say cities along Michigan’s border are hurt when drivers go to neighboring states to fill up their vehicles, but there is little evidence of significant economic impact. The proposal does not solely impact border cities, and justifications based on the impact to border cities alone fail to account for the good of the state.
Lowering the price of gas would also negatively impact the environment. The gas tax and high gas prices discourage people from driving, which means less greenhouse gases from tailpipes are released. A repeal of the gas tax would likely increase gas sales, and it would not discourage people from making environmentally conscious driving decisions.
There is no doubt that the state’s infrastructure must be addressed, seeing that Michigan’s roads are consistently voted some of the worst in the nation. But this proposal puts Michigan in a worse position to fix the problem. Other proposals — including raising vehicle registration fees — should be explored to return Michigan’s roads back to favorable conditions and to fund the project the right way.