Michigan raises its gas tax…is Wisconsin next?
January 3, 2017
By James Wigderson
Special Guest Perspective for the MacIver Institute
It was just last January when Michigan drivers were able to point their finger at Wisconsin and laugh because they were enjoying the benefit of a price war for gasoline. Three gas stations in Houghton Lake were charging just 47 cents per gallon.
Wisconsinites could never have such a price war here because an antiquated minimum markup law, the so-called Unfair Sales Act, actually requires gas stations to mark up the price of gasoline 9.18 cents or more. The law also requires a minimum mark up of 6 percent on alcohol and tobacco retail sales while preventing retailers from selling other products below cost.
Because, you know, consumers need to be protected from cheap prices. And just to make sure Wisconsinites will never, ever see a gas price war like Michigan went through (with no casualties, I might add), Wisconsin even has its own version of the price police working for the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). They’re ready to spring into action the moment someone gets cheap coffee or gasoline.
But now it’s Wisconsin’s turn to laugh, and not just because the Green Bay Packers beat the Detroit Lions. Michigan just raised their state gas tax from 19 cents to 26.3 cents per gallon on January 1, the first state gas tax hike in 20 years. Combined with the state sales tax of six percent and Michigan’s gas tax will be 37.8 cents per gallon.
Michigan is also expected to raise vehicle registration fees from $120 to $144 for the typical car. The combined gas tax hike and increase in registration fees is expected to generate $455 million in revenue, according to the Detroit News. The new gas tax increase takes Michigan from 18th in the nation into the top 10. It’s Pure Michigan.
By comparison, Wisconsin’s state gas tax will “only” be 32.9 cents per gallon and typical vehicle registration costs are $75. After Michigan increases their gas tax, Wisconsin will only have the second highest gas tax of the midwest states, according to the Tax Foundation. Our national ranking will actually drop from 12th to 13th place, thanks to Michigan and New Jersey. (Those sneaks in West Virginia dropped underneath us by actually lowering their gas tax by a penny.)
On the other hand, when over 114,000 moved from Illinois last year, according to the Chicago Tribune, they probably fueled up before they left and snuck around the tollways. They only paid 30.18 cents per gallon.
Of course, in politics and gas prices, all victories are temporary. With a $1 billion transportation fund shortfall, Wisconsin legislators are looking at possibly raising our gas taxes. According to the state Legislative Fiscal Bureau, Wisconsin’s gas tax would have to jump 28 cents per gallon to cover the entire shortfall without any borrowing. Such an increase would make the Badger state #1 according to the Tax Foundation.
That kind of gas pain is enough to make someone call an ambulance.
Even to cover the governor’s more modest transportation budget goals without borrowing, the state will need to increase the gas tax by seven cents per gallon. That catapults us past Michigan again, making Wisconsin drivers pay the highest gas tax in the midwest.
Michigan Republicans were able to sell the gas tax and registration fee increases by combining them with $205.8 million in annual property tax relief. It remains to be seen how Wisconsin Republicans who control the legislature here will sell a gas tax increase.
So we’ll keep the laughing at our Michigan neighbors to a minimum. It looks like they may have the last laugh, yet.