As if the tax increases to avoid the so-called “fiscal cliff” weren’t enough, state lawmakers and Governor Snyder are looking to increase gas taxes and vehicle registration fees by $1.2-1.4 billion annually, with mechanisms to increase transportation spending in perpetuity. Never fear, however, they are giving taxpayers two options: raise taxes or… raise taxes. And neither option allocates all of the funding to fixing roads.
Apparently, lawmakers and the governor have already weeded out any and all government waste and unsuccessful programs. That must be why there is no option on the table to balance out these increases with a proposed cut in other taxes or a matching reduction in spending.
A coalition of businesses, associations, and unions called “The Michigan Transportation Team (MTT)” have joined together with the common goal of improving Michigan’s transportation infrastructure through tax hikes using the motif — Just Fix the Roads – Save Lives. Save Money. The coalition is a Who’s Who of opponents to Proposal 5; Prop. 5, had it been approved, would have made it harder to raise taxes.
Here is a synopsis of the two options:
OPTION A: Increase Gas Taxes, Vehicle Registration Fees
- Replace the current 19-cent per gallon gas tax and 15-cent per gallon diesel tax with a new tax based on the wholesale price of fuel.
- Immediately increase the minimum tax to 37-cents per gallon.
- Make the maximum tax 50-cents per gallon with a maximum increase per year of 1-cent.
- Future lawmakers can always change the maximum increase and maximum per gallon tax.
Michigan’s current taxes on gasoline as of January 2013 (including state and federal taxes) total 57.1-cents per gallon. With the increase proposed, drivers would be expected to pay approximately 75-cents per gallon in total taxes, giving Michigan the highest gasoline and diesel taxes in the country.
- Increase the annual vehicle registration tax by approximately 80%, with similar increases for trucks and trailers.
- Change the way registration fees are calculated:
- Instead of the basis reducing gradually to 72.9% of the list price and remaining there from the fourth year on, the basis would stay at 100% for ten years and then reduce to 50%.
Put simply, the annual registration tax on a car listed at $15,000 would increase from $73 to $131 and a vehicle listed at $20,000 would increase from $98 to $176. These increases would remain in effect for 10 years until they would drop to 50%. This means that even used cars purchased five years later would have the initial registration tax calculated even though the car would have significantly depreciated in value.
OPTION B: Increase Sales Tax to 8%; Repeal Gas Taxes
- Increases the current sales tax of 6% to 8%, which would require a vote of the people.
- Not all of the current 6% sales tax goes to roads and would remain that way.
- Repeals the current Motor Fuel Carrier Tax contingent upon approval of the tax increase by voters.
- Dedicates 0.7% of revenue collected to pay for recreation trails and cleanups through the Michigan Conservation and Recreation Fund.
- Dedicates at least 90% of revenues to transportation projects.
- Authorizes the legislature to issue debt against future revenue from the 2% hike.
- The debt, ironically, shall not be counted as state debt.
If roads are a priority in order to save lives and money as stated by Governor Snyder, then let’s make them one. But let’s do so without taking away more money from the private sector, which is struggling with chronically high unemployment and decreased wages and home values.
Overall, Michigan spends nearly $1,000 more per person than Indiana. It isn’t a matter of revenue; it’s a matter of where that money is spent. The Michigan Transportation Team should be using the broadness of its coalition to target spending, promoting a message of ‘priorities,’ not ‘tax increases.’
There does look to be a light at the end of the tunnel. Hopefully, House Speaker Bolger maintains this attitude going forward:
— Greg George (@gregmgeorge) February 4, 2013
@gregmgeorge Speaker B. agrees. We have to answer the billion-dollar road question, but taxpayers are the last place we should turn. ^aba
— House Speaker Bolger (@SpeakerBolger) February 4, 2013
And don’t forget your crucial role as a citizen activist. Click HERE to send your lawmakers a message to prioritize transportation funding instead of raising taxes.