As costs rise, Michigan explores gasoline tax vacation | State

FLINT, Mich. (WJRT) — Gas prices increased by 20 cents in a matter of hours around Mid-Michigan.

Drivers started Thursday morning with gas at $4.79 a gallon for regular. But as of Thursday afternoon, prices in the area were climbing to $4.99 per gallon.

Michigan’s Legislature has tried to pass a gas tax holiday since March. Republicans passed a bill that would have paused the state’s 27.2-cent excise tax on gasoline.

Gov. Gretchen Whitmer vetoed that bill while pushing for a pause on income tax collections on gasoline and diesel fuel. She also called on Congress to pause collections of the federal excise tax on motor fuel.

Whitmer was concerned that the loss of revenue from the excise tax would take away funding from road and bridge projects.

A second bill passed the state Senate last week, calling for a three-month pause of both state excise and sales taxes on motor fuels.

“It would be nice if they did pass a gas holiday. But do I think they’re going to? No. Y’know, I don’t see them all agreeing,” said driver Chris Sudberry, who is skeptical that Whitmer and the Michigan Legislature will pass a gas tax holiday.

There are three gas taxes in Michigan: the state tax of 27.2 cents per gallon, the federal tax of 18.4 cents per gallon, and the state gas sales tax of 6 percent per gallon.

Money collected from the state tax is meant to help with road repairs and construction, while money from the sales tax helps support certain school funds.

Economist Zach Cohle from Saginaw Valley State University said it’s a lose-lose choice.

“You get rid of gas taxes, you need to find another source of revenue. So you need to basically take from some other projects to make necessary adjustments to the roads. Or you can make no adjustments to the roads, in which case your infrastructure falls and no one likes that,” he said.

Driver Seth Hixenbaugh said he believes Whitmer made the right call.

“Seeing the state roads go unfunded, I don’t see it going well for the state of Michigan,” he said.

Meanwhile, University of Michigan-Flint economics professor Chris Douglas said he’s skeptical that a gas holiday would ultimately lower the final price drivers see at the pump because lower prices would drive demand back up.

“It’s very likely in the immediate term that supply can’t match that increase in consumption, which is going to cause the price to shoot right back up again. A gas tax holiday doesn’t do anything to address the root cause of why oil and gasoline prices are rising,” Douglas said.

During a press conference on Wednesday, Whitmer said she’s still giving thought toward whether to approve the sales tax suspension, which sends money to the general and school funds.

She also expressed support for a gas holiday at the federal level.