Legislation been introduced that reportedly would extract more than $1 billion from motorists through a new state fuel tax and a huge increase in the vehicle registration tax. The latter, paid each year on a car owner’s birthday, would increase 67 percent on average according to The Detroit News.
Happy Birthday taxpayer! Now, give your state government $60 more.
The plan also moves the current gas tax from the pump to the wholesale part of the transaction, raising the per-gallon levy from 19 cents per gallon to around 28 cents per gallon. The money would be spent on road and bridge maintenance.
Michigan’s infrastructure needs repair, but before looking to take more money from drivers, the Legislature needs to address the “original sin” of the state’s transportation funding mix — the 6 percent sales tax levied on fuel, most of which does not go to build or repair roads. The sales tax is why Michigan imposes the 5th highest levy on gas nationwide, but still can’t scrape up enough to fix its roads.
In other words, Michigan’s fuel taxes are already uncompetitively high, which is one reason no new road taxes should be imposed unless the extra revenue is offset by a tax cut of some sort, perhaps to the personal income tax.
Another prerequisite for higher road taxes should be to enact money-saving reforms, such as eliminating a so-called “prevailing wage” law that prohibits granting government construction contracts (including for roads and bridges) to the lowest bidder unless the company pays above-market union wage scales. Spending gas tax money on non-motorized transportation projects also must end.