Lansing Lawmakers Discuss Three New Road Funding Options, Tax Increases

March 04, 2013

Raising taxes is never popular. But apparently raising the gas tax and making Michigan’s gas tax the highest in the country didn’t sit well with Michigan drivers. Lansing lawmakers have altered their proposed solutions, but don’t get too excited. They still want to increase taxes instead of prioritizing spending.

At a meeting last Tuesday, Governor Rick Snyder, House Speaker Jase Bolger, and Senate Majority Leader Randy Richardville discussed three new prospective plans. Because the sales tax on gasoline doesn’t go to roads, the three plans involve exempting the sales tax on gasoline and raising gas taxes a subsequent amount that would then be allocated to roads.

Projected sales tax revenue distribution for fiscal year 2013-14 (via Michigan House Fiscal Agency). (Photo by MLive Media Group)

Most drivers think that the sales tax they are paying on gasoline is being used for roads, so the proposed solution seems like a no-brainer for those who aren’t politicians.

What about the lost sales tax revenue from education and revenue sharing for local governments? Again the solution is playing monkey-in-the-middle between what is practical for families’ and taxpayers’ budgets, and what works in Lansing.

Good governance and sound budgeting call for spending priorities; Lansing raises taxes.

‘It’s For The Kids’ Option: The first option state lawmakers are considering is hiking the state sales tax from 6% to 7%, requiring a vote of the people, and dedicating that money to replace the lost money from the exempted sales tax on gasoline. According to the Sales Tax institute, the ‘it’s for the kids’ option would give Michigan the second highest state sales tax behind California at 7.5%. Increasing the price of gasoline isn’t politically popular, but more money for kids is usually an easier sell.

Midnight Tax Attack Option: A second plan would extend the current sales tax to services. This would not require a vote of the people. According to Gongwer, in 2007 the legislature extended the sales tax to wide-range of services in the middle of the night. Those with lobbyists present seemed to win exemptions from the tax increase but those without for the most part did not.

‘It’s For The Kids’ Revisited Option: The third suggestion would replace the lost revenue by increasing the 6-mill State Education Tax on property.

To date, Lansing lawmakers have not agreed to any of these proposals and are still discussing solutions. What’s missing? A solution that involves the prioritization of spending.

Some lawmakers in Lansing would have you believe that they have eliminated all wasteful spending from the budget because they have balanced it early the last two years. This is simply not the case. Our tax dollars are still being spent on film subsidies, grants for tow truck companies, tourism advertisements, community revitalization projects, and food markets.

Lawmakers in Lansing need to define what the role of state government should be and prioritize spending accordingly. Government is not a one-stop-shop to fix all problems facing Michiganders. They should allow private enterprises who seek customers voluntarily to provide for the wants and needs of society. Individuals best know how to spend their own money, whether they do so by starting new businesses, expanding old ones, buying a new pair of shoes, or taking the family on a much needed vacation. Entrepreneurship and voluntary trade drives the economy; government stifles innovation when lawmakers get too involved. And in Michigan lawmakers are too involved.

It is time that legislators stopped trying to pick business winners and fix the roads.

TAKE ACTION to tell lawmakers to prioritize spending, don’t raise taxes! 

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