Analyst: Gas tax could slow economy, harm families

Posted at 8:22 PM, Mar 05, 2019
and last updated 2019-03-05 20:34:27-05

LANSING, Mich. — A gas analyst is warning Gov. Gretchen Whitmer’s proposed gas tax could have a significant impact on Michigan families and the economy.

Patrick DeHaan, head of petroleum analysis at GasBuddy, says the tax could impact the costs of goods being transported using fossil fuel and will force drivers to spend hundreds more every year to fill up their tanks.

Whitmer proposed raising the 26-cent gasoline and diesel gas taxes in 15-cent increments over the next 18 months. The proposal was met with heavy criticism from citizens and Republican lawmakers, but she says the tax is the best way to raise the money needed to fix Michigan’s roads, one of her campaign pledges.

“We did undertake a lot of debate and explored a lot of different possibilities, and this was the smartest, quickest way to remedy the problem in a way that helped us address these other issues that are vexing our state,” she said.

DeHaan says the proposal would be the largest single legislation increase in gas taxes ever seen in America.

“It’s going to cost several hundred dollars more a year for anyone with a car, and if you have two cars in your family, it could cost upwards of $550 more to fill up, so it’s certainly a lofty increase,” he said.

In her presentation Tuesday, Whitmer said there are plans in place to offset the extra cost for low-income families. She also unveiled a plan to increase the earned income tax credit, which applies to working families or people with low to moderate incomes.

DeHaan said the uptick at the pump could also be passed down to consumers through the price of goods, which could slow the state’s economy.

“You talk about the direct costs to motorists that are shelling out, at the end of it, 45 cents a gallon more, but the indirect cost on goods, the cost of goods going up (for) things like your grocery store items,” he said.

He said the size of the trucks will keep costs from rising too far, but there is likely to be a trickle-down effect.

“Municipalities, cities, police, fire units that are going to have to pay more for fuel as well, if they pay a retail price,” DeHaan said. “This is nothing short of one of the most significant increase in gas tax across the country I’ve ever seen.”

Rather than increasing the gas tax, DeHaan suggests implementing a toll road system. He says a toll system would “even the playing field,” charging people more for miles driven and weight rather than passing the price onto people with less fuel-efficient vehicles.

Whitmer said her plan is designed to prevent funding from being diverted from one purpose to another, and unless other revenue like the corporate tax is raised, this is the state’s best option.