LANSING – Michigan does collect more sales tax as gasoline prices increase, the Citizens Research Council said in a report released Tuesday, but the group said any gains there are offset by declines in other taxable purchases.
Between fiscal year 2001-02 and 2005-04, sales tax on gasoline increased 70 percent to $546.1 million. But over the same period, total sales tax revenues increased only 4 percent to $6.6 billion, the report said.
“While recent spikes in gasoline have contributed to increased sales tax revenue from gasoline purchases, the data suggest that they have had little impact on total sales tax collections, suggesting that consumers forgo other taxable purchases to finance their gasoline consumption when confronted with higher fuel prices,” the report said. “Basic microeconomic principles suggest that rising gasoline prices do not result in surplus tax revenues for the state.”
The report echoes what Treasury officials have said in past weeks in response to calls for limits on the sales tax on gasoline.
“Everyone wants to say that we’re reaping significant sales tax revenue because to the high gas prices but that’s just not true,” said Treasury spokesperson Terry Stanton. He said in large part declining auto sales have offset any gains in sales tax on fuel.
The CRC report also indicates that taxes as a percentage of the sale price of gasoline fall as the price increases. At $2.50 a gallon, state and federal taxes represent 20.2 percent of the price. At $3 a gallon, taxes fall to 17.8 percent of the price.
The largest part of the cost, about 55 percent, is the cost of crude oil, with about 22 percent coming from refining costs and profits and 4 percent from marketing and distribution costs.
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