Continue Reading Below
The fiscal 2020 proposal calls for a nearly 45 cent-per-gallon tax hike to be introduced in phases by Oct. 2020 – consisting of three 15 cent increases over the course of a year. The proposal would raise the current tax rate to 71.3 cents per gallon from 26.3 cents per gallon, which would make it the highest in the nation.
Following the initial hikes, the tax rate would be indexed to inflation.
Whitmer estimates the measure could generate an extra $2.5 billion in revenues, which would be allocated according to a new formula that will favor the most highly traveled and commercially important state and local roads.
In order to offset the effects of the increase in the motor fuel tax on lower-income families, the budget doubles the earned income tax credit over two years. On the other hand, more businesses would be subject to corporate income taxes.
Whitmer said the tax would cost the average driver $23 a month, or $276 a year, according to The Associated Press.
Fuel tax hikes have been floated across the nation as a means to pay for needed infrastructure reforms. Reports even surfaced last year that the president supported an increase in the federal fuel tax to help pay for his $1.5 trillion infrastructure revamp.