Study: Replacing gas tax with mileage fees to repair roads | Michigan


(Centre Square) – A new report recommends replacing the state gas tax with mileage-based user fees to repair Michigan roads.

In the study “Michigan’s Road Forward: Replacing Gas Tax with Mileage-Based User Fees,” researchers from the Mackinac Center for Public Policy and Reason Foundation examine the state’s road funding system.

“Increasing revenues for roads through fuel taxes is not sustainable,” said Chris Douglas, professor of economics at the University of Michigan-Flint and co-author of the study, in a communicated. “Mileage-based user fees create a more equalized and sustainable way to pay for public roads.”

The study indicates that using fuel tax revenue to fund road repairs ultimately fails due to increased fuel efficiency and an increase in the number of electric vehicles on the road that do not do not pay gasoline taxes, but pay for registration and other fees.

The study found that the average fuel efficiency of cars increased by 26% between 1997 and 2017. The average fuel efficiency is expected to increase due to government standards set by the federal government and technological advancements. The study estimates that energy efficiency gains alone would result in a $1 billion a year shortfall in Michigan’s gasoline tax revenue by 2050.

In 2020, Michigan collected $3.17 billion in fuel taxes and vehicle registration fees, but only $2.92 billion was distributed to fund state, county, city roads. or villages.

“Thus, Michigan diverts 8% of its gasoline tax and vehicle registration revenue to purposes other than publicly accessible roads, leading Michiganians to view the gasoline tax as “just another tax” they pay,” the study says. “A revenue stream like this meets the legal definition of a tax, not a user fee, and that’s one of the biggest flaws of the fuel tax.”

The study proposes replacing gasoline taxes with MBUF. Much like household utility payments, drivers would be charged based on their use of roads and whether those roads are busy freeways or local county roads.

Heavier vehicles such as trucks that cause significantly more road damage than passenger vehicles could pay a higher rate, as they already do on toll roads, to pay for road construction and maintenance.

Currently, state vehicle registration fees and fuel taxes and vehicle registration fees of 27.3 cents per gallon are remitted to the Michigan Department of Transportation, local governments that maintain roads and the Global Transportation Fund to 81 local transit systems.

A federal gasoline tax of 18.4 cents per gallon and a diesel tax of 24.3 cents per gallon are paid into a national road fund that matches certain eligible state and local road projects.

Another problem that depends on fuel tax revenue is the volatility of gasoline prices, according to the report. Motorists tend to buy less fuel when gasoline prices are higher, further reducing highway revenues.

“It’s important to ‘sustain’ revenue from Michigan’s highways, making them independent of vehicle propulsion sources,” said study co-author Robert Poole, director of transportation policy at Reason. Foundation, in a press release. “About a dozen other states have run pilot projects to test mileage charges, and they’ve learned a lot about what works and what doesn’t. Michigan can benefit from their experience by implementing a pilot mileage fee in the near future. »

Paying for roads in this way would require collecting vehicle data. The study suggests possible privacy guarantees so that drivers can choose their level of privacy.


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