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Michigan Considers Restructuring Diesel and Gasoline Taxes

April 18, 2013

By Evan Lockridge

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More than two months after Michigan Gov. Rick Snyder called for increasing revenue for road and bridge projects, state lawmakers are considering a plan that would end some taxes on fuel and bring in new ones.

According to published reports, one proposal The House Transportation and Infrastructure Committee is looking at eliminates the 15 cents per gallon tax on diesel, the 6% sales tax on gasoline and 19-cent-per-gallon gasoline, replacing them with a percentage tax at the wholesale level. It would set the tax for both fuels initially at 12% but would allow the state to adjust it every three months as prices rise or fall, with a minimum rate of just over 10%.

Supporters of this say this new structure would mean more revenue would be dedicated for road work because currently a big portion of the state sales tax on gasoline goes for other purposes such as education. Opponents describe the plan as convoluted and say it wrongly assumes the price of fuel will increase in the future.

A separate plan being considered calls for increasing vehicle registration fees, as advocated by Gov. Snyder.

Michigan's diesel tax was last raised in 1984 while the gasoline tax last increased in 1997. 

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