Michigan voters reject gas tax hike

Michigan voters reject gas tax hike
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Voters in Michigan have rejected a proposal to increase gas taxes in their state to help pay for transportation projects, the Detroit Free Press reports

The proposal, which was included in a referendum that was voted on this week, called for eliminating the state’s current 14.06-cent-per-gallon sales tax on fuel purchases and increasing its 19-cent-per-gallon gas tax to at least 41 cents per gallon, with future increases tied to inflation. 

The referendum was soundly defeated Tuesday by a margin of 80 percent to 20 percent, according to the report. 

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The result will leave Michigan drivers paying about 33 cents per gallon in state taxes on their fuel purchase, but only 19 cents will be dedicated solely to road projects. 

The additional money transportation backers were seeking would have been collected on top of an 18.4-cent-per-gallon federal gas tax that is charged to all drivers in the U.S. to fill the federal government’s transportation funding coffers. 

The American Petroleum Institute says the gas tax increase would have brought the total amount of money that drivers in Michigan were charged at the pump to nearly 59 cents per gallon. 

As it stands now, the state drivers are paying about 51 cents per gallon extra at the pump, according to the group. 

Michigan was the latest in a series of states to try to increase their local gas tax in recent years as federal transportation funding has dried up. 

Lawmakers are currently facing a May 31 deadline for the expiration of federal transportation funding, and they are struggling to come up with a way to pay for an extension of the measure. 

Prior to this week’s election, transportation advocates in Washington have pointed to the willingness of states like Michigan to raise their own gas tax as evidence that a hike in the national levy would be politically palatable this year. 

Conservative groups in Washington have made clear they would consider an increase in the federal fuel levy a tax hike, however.

The gas tax has been the main source of transportation funding for decades, but it has not been increased since 1993, sapping its buying power.

While the tax hike has backing from business associations and unions, opposition from conservative groups, such as Heritage Action and the Club for Growth, led GOP leaders in the House to call it a nonstarter.

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax will only bring in $34 billion annually without an increase.  

The Department of Transportation has said that its Highway Trust Fund will run out of money in late July or early August if Congress does not come to an agreement on an extension in the next couple of weeks.