Michigan House Republicans say the state can raise $542.5 million annually for road repairs by phasing out its 6 percent sales tax on gasoline and replacing it with an increased state gas tax.
The state sales tax on gas generates an estimated $894 million in annual revenue for multiple needs, including K-12 schools and local governments. House Speaker Lee Chatfield (R-Levering), instrumental in forming this plan, noted that sharing the money is one of the primary road-funding problems. Replacing this sales tax with an increased gas tax ensures that all revenue generated from purchases at the pump is devoted to roads and bridges. After gradually phasing in over two years, this transition would cause no net increase to the state’s 26.3-cents-per-gallon gas tax and would generate $212.1 million annually in new revenue for state-owned highways and $330.4 million for county and city roads.
House Republicans have not formally introduced their legislative proposal. They have, however, rejected Gov. Gretchen Whitmer’s (D) $2 billion road repair proposal, contending that her 45-cents-per-gallon gas tax increase is too costly. Some Democrats, including Rep. Leslie Love, D-Detroit, noted that the Republican proposal does not provide the revenue independent experts say is needed to implement necessary repairs. Other Democrats argued that the House plan doesn’t indicate how schools and municipalities will be compensated for lost revenue if the sales tax is removed.