How do Michigan Gas taxes really compare?
The tax information now reflects the 4 cent increase in the gas tax that took effect on August 1, 1997. The Michigan Legislature passed the increase at 5 am on July 16th. Unfortunately, they chose not to offset the excise tax increase with a corresponding sales tax (on gasoline) decrease. This is too bad because they could have looked really good by being able to say "we increased road funding without raising the total price of gasoline." I think this would have made Engler look so good the Democrats couldn't stand it. Being that the gas tax hurts the poor the most you would think this plan would have worked! Politics gets in the way of common sense again. The good news is this does mean more money for the roads.
Now we have the highest total gas tax of all of our neighbor states.
50 state gas tax data and 50 state sales tax on gas data
Let us look at the facts instead of the hype! The following table lists TOTAL taxes levied on gasoline by neighboring states. Source: Bureau of Transportation Statistics.
Here is how I came up with those numbers:
Michigan
In Michigan the sales tax is applied to the actual sales cost + Federal Tax. So Michigan not only is taxing gasoline for non-road use (the sales tax revenue goes to the general fund - not roads) but also is taxing a tax.
Total taxes per gallon assuming a sale price of 80 cents per gallon is ((80 + 18.3) * .06) + 18.3 + 19 = 43 cents per gallon.
Ohio
Total taxes per gallon assuming a sale price of 80 cents per gallon is 18.3 + 22 = 40.3 cents per gallon
Indiana
Indiana applies the sales tax before any other taxes are applied
Total taxes per gallon assuming a sale price of 80 cents per gallon is (80*.05) + 18.3 + 15 = 37.3 cents per gallon
Illinois
Illinois applies the sales tax before any other taxes are applied
Total taxes per gallon assuming a sale price of 80 cents per gallon is (80*.0625) + 18.3 + 19 = 42.3 cents per gallon
Pennsylvania
Total taxes per gallon assuming a sale price of 80 cents per gallon is 18.3 + 22 = 40.3 cents per gallon