Michigan's gas prices have gone up. Here's what goes into the cost of a gallon of gas.
Gas prices have gone up in Michigan now that the state tax on gas jumped from 19 cents to 26.3 cents per gallon. Taxes on diesel have gone up too, going from 14 cents a gallon to 26.3 cents. These "motor fuel taxes" don't include the state’s 6% sales tax, or the federal tax of 18.4 cents per gallon.
That puts Michigan at one of the highest at-pump tax rates in the country, trailing Pennsylvania, Washington, Hawaii, New York and California, according to the Tax Foundation.
Michiganders will now be paying around 37 cents per gallon in local and state taxes and fees.
Here's how the percentages break down, according to Mark Griffin at the Michigan Petroleum Association:
The plan is for the new gas tax to be reinvested into fixing Michigan’s crumbling roads and bridges. But the Detroit Free Press says that this might not happen immediately.
Transportation officials warn the higher taxes won’t translate into better roads for years to come because the Legislature is gradually diverting $600 million in income tax revenue from the state’s general fund to repairing roads. Michigan won’t be spending the full additional $1.2 billion annually on roads and bridges until 2021.
Instead, the revenue from the gas tax will be used to replace the money from the state’s general fund that was used for road improvements in the 2015/16 fiscal year.
The new state motor fuel taxes will increase with the Consumer Price Index starting in 2022.
In addition to the gas tax increase, the state is also increasing vehicle registration renewal fees by 20%.