LANSING – If the state had, in 1997, implemented a fuel tax based on a percentage of the wholesale price, it could have substantially more transportation revenue than it does now, the Citizens Research Council said in a report released Thursday.
To replace the 19-cent per gallon gas tax in 1997 would have required a 23.8 percent tax on wholesale gasoline prices, the report said. For 2011, that would have provided nearly three-and-a-half times as much revenue as the current tax.
Because of gas price drops, the change would have provided less revenue in fiscal year 1997-98 and 1998-99, but after that, gas prices would have meant more revenue.
“Gasoline prices rose much faster than inflation between fiscal years 1997 and 2011, with gasoline prices rising 177 percent compared to an overall inflation rate of just under 40 percent,” the report said.
To just adjust the revenue for inflation would have required increasing the tax to 27 cents per gallon for the current fiscal year, the report said.
The report acknowledged that the tax might not have actually generated more because the Legislature could have adjusted the rate as prices spiked. And it could generate less revenue in the future if gas prices stagnate or fall.
Authors said it was also unclear if declining gasoline use, through fuel efficiency and reduced travel, would cut into the revenue from the tax more than the increase in price would boost it.
“A recovery in Michigan’s economy would lead to increased consumption of gasoline, but this increase would be offset, at least to some degree, by the increasing fuel efficiency of cars,” the report said. “The path of gasoline prices is also unclear. Prices rose rapidly between 1997 and 2011, but this does not mean they will continue to rise going forward. In fact, they could decline.”
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
a>>
