Why There’s a State Tax Vote on May 5 and What It Costs

On the last day of the 2014 legislative session, state policymakers approved a constitutional question to raise money for the roads and spend additional money elsewhere. The vote will be held on May 5.

There has been a long-term discussion about how to fix and pay for the roads in Michigan. While 85 percent of state roads are in good or fair condition and local roads are in worse condition, they are projected to deteriorate without additional money. In 2009, Gov. Granholm proposed a fuel tax increase and legislators have been discussing the matter ever since.

Those discussions came to a head in the 2014 session when the Senate voted to increase fuel taxes while the House voted to replace the sales tax currently applied on fuel with fuel taxes. Under the House plan, taxpayers would not see higher taxes.

The compromise reached at the deadline came up with a plan to increase sales taxes, fuel taxes and registration fees that would generate $2 billion dollars in its first year.

The Mackinac Center’s briefing on the proposal explains in detail the proposed state constitutional amendment and the bills that are part of the package. It also points out its costs to taxpayers.

We found that the proposed tax increases will cost a typical household between $477 and $525 annually. The proposal calls for increasing the state sales tax from 6 percent to 7 percent and this will cost $389 a year. The increase in fuel taxes will cost a typical household between $89 and $136.

The proposal also calls for increasing the fuel taxes annually. However, the mechanics of those increases ensure that rates will increase above inflation.

The brief gives taxpayers a look at where their dollars will go if this proposal is approved. You can find it at Mackinac.org/21128.