Truck Registration and Fuel Taxes

Increased truck taxes are one viable way to raise additional revenues; however, unit taxes would have to be raised a great deal to raise significant levels of revenue. For instance, the diesel tax raises just $5.6 million to $6.9 million per penny compared to $45.7 million for a penny of gasoline tax. It is also important to note that Michigan truck taxes went up 138.9% between 1982 and 1992. However, Michigan truck user taxes are some of the lowest in the country even after consideration of sales taxes, and both registration fees and fuel taxes are lower than in neighboring states.

The rationale for raising truck taxes further is that trucks are still not paying their full share of costs imposed on Michigan roads. There are no Michigan cost allocation studies, but the latest federal study indicates that trucks are paying 86% of their costs nationally. Studies in fifteen states indicate an average cost recovery of 96%; however, those states have higher fuel taxes than in Michigan. In those fifteen states the average gas tax with various add-ons is 23.6 cents compared to 14.5 cents per gallon in Michigan, making the Michigan rate about 60% of the rate in these fifteen states. It is likely that Michigan's fees are no higher than the rate these fifteen states.

On the other hand, there is a very good rationale for keeping truck taxes down. Lower truck user taxes offer one of the few competitive advantages Michigan has on the tax front, and overall state taxes on truckers are higher in Michigan than in neighboring states after workers' compensation, corporate taxes and unemployment taxes are taken into account. An increase in truck taxes should not be taken lightly in a state with extensive movements of heavy industrial products and components for the auto industry, and where there is extensive aggregate mining.

It also must be realized that such an increase will be passed on in the form of higher costs for Michigan manufactured goods, and for the goods that Michigan residents buy in stores.