Note 2011-02 ( November 2011 ) 3 pages
What if Michigan Had Enacted a Percentage Tax on Gasoline in 1997?
Last week, Governor Snyder proposed replacing the state’s current 19 cent per gallon tax on gasoline with a tax based on a percentage of the price at the wholesale level. Michigan last increased its gasoline tax in 1997, when the rate was increased from 15 cents. Both inflation and a decrease in miles driven have reduced the purchasing power of the state’s gas tax. While the proposal is for the percentage tax to be revenue neutral when enacted, the Governor has argued that the new tax is a more viable approach to funding roads and bridges, and that over the long run it will better maintain its purchasing power.