Michigan Has Low Gas Tax — Except When It Doesn’t

Michigan lacks a long-term plan for keeping roads in good condition, says a leading official of a construction trade group. But his apparent solution misses critical information and poses a new danger to the wallets of Michigan residents. 

Robert Coppersmith, executive vice president of Michigan Infrastructure & Transportation Association, decried the state of roads in an op-ed for The Detroit News. Michigan’s gas tax is the lowest in the Midwest, Coppersmith said, citing IGEN, a company that sells software to help businesses comply with tax requirements. The tax provides about half the money needed for infrastructure construction and maintenance, Coppersmith noted, adding that tax revenues are expected to fall due to increased fuel efficiency in vehicles and the possible transition to electric vehicles.

Coppersmith does not explicitly call for an increase in the gas tax, but his claim that Michigan has the lowest gasoline tax in the Midwest points in that direction. That claim, however, leaves out some essential information.

Michigan in fact collects more gas taxes than most other Midwestern states. The source Coppersmith cites does not include sales taxes. Michigan is one of six states to impose a sales tax on gasoline in addition to the gas excise tax, according to the The Tax Foundation. When the sales tax is included, Michigan has the tenth-highest fuel tax in the nation, according to the American Petroleum Institute. In the Midwest, only Illinois and Indiana impose higher total tax burdens on drivers.

The average cost of gas in the state currently is $5.22, according to AAA. At $5.22 per gallon, the state collects 27.2 cents per gallon in fuel excise taxes and 27.7 cents per gallon in sales taxes.

A representative for Michigan Infrastructure & Transportation Association noted that the sales tax stands in the way of improving the state's infrastructure.

“Correct, we are one of six states that assess sales tax on our motor fuel,” Lance Binoniemi, vice president of government affairs for the association, said in an email to Michigan Capitol Confidential. “Most states put revenues generated from the sales tax on fuel toward their transportation system. Michigan uses those revenues generally for schools and locals.”

Binoniemi noted that MITA considers the sales tax to be “road funding's biggest policy problem as it artificially raises the tax on fuel without putting the revenues into our roads and bridges. Most Michiganders believe that that money is going towards improving our transportation.”

Editor's note: This article has been updated to include a post-publication response from Michigan Infrastructure & Transportation Association. Also, due to an editorial error, the article originally included an incorrect figure for Michigan's gas sales tax.